Tax laws are constantly changing, and the Tax Cuts and Jobs Act (TCJA) is no exception. This important tax legislation will have a significant impact on individuals, businesses, government entities, and tax-exempt entities. The Internal Revenue Service (IRS) is currently working on implementing the TCJA, and this month they will begin sending payments to millions of households. It is important to understand the current tax laws in order to analyze the tax burden on companies over time.
The creator of a transferring trust is treated as the owner of the trust's assets for income tax purposes. Income tax brackets will adjust to inflation, as will the standard deduction, which most taxpayers claim. The TCJA maintained preferential tax rates on long-term capital gains and qualified dividends, as well as the 3.8 percent net investment income tax (NIIT). The Biden administration has proposed the American Employment Plan to finance infrastructure spending, which would increase the corporate tax burden.
This plan includes an alternative minimum tax on corporate book revenues, a special tax on share buybacks, and a tax on unrealized capital gains for billionaires. Senator Ron Wyden (D-OR) has also proposed the Decent, Affordable and Safe Housing Act (DASH) for All to address homelessness and housing costs. To remain competitive in the global economy, presidential candidates and policymakers must consider upcoming tax increases, such as the amortization of R&D and the phasing out of broader spending provisions. Unrealized capital gains on valued assets held by a trust, corporation, or other irrevocable non-corporate entity would be subject to taxation if those assets had not been recognized for tax purposes within the previous 90 years.
State taxes on GILTI are unconventional and economically uncompetitive, and will be even more so if the federal government takes a more aggressive approach to taxing GILTI. It is important for policymakers to focus on areas of common ground and find incremental places to improve the code tributary. Despite the uncertainty of proposed changes to tax law given the current political environment, there is a high degree of certainty in current tax laws if Congress does nothing. Potential confusion about how early payments of child tax credits will affect tax refunds, and an incomplete portal for updating taxpayer information are some of the pending questions that need to be addressed.
