Yesterday, alliantgroup Senior Vice President and former U.S. Congressman Rick Lazio was interviewed by Bloomberg TV to give his insight on the Trump administration’s recently released tax plan.
During the interview, Rick offered three key points with regards to the administration’s proposal and its potential impact on American businesses:
There is general agreement between the administration and congressional leadership that tax reform will stimulate economic growth.
During the interview, Rick described the White House’s plan as “roughly aligned” with the House GOP’s current blueprint, with both plans significantly cutting corporate and marginal rates with the intention of stimulating economic growth and business investment. Along with slashing the corporate rate from 35% to 15%, the proposal would collapse the marginal rates into three tax brackets of 10%, 25% and 35%.
Pass-through entities stand to benefit from the tax reform proposal.
In addition to the reduction in the corporate rate, the best news for U.S. businesses is that pass-through entities will also be taxed at the lower rate of 15%.
Why is this newsworthy? An estimated 95% of American companies are organized as pass-through entities, including the vast majority of small and midsize businesses—the companies most responsible for job creation. By treating these businesses the same as large corporations, this plan would open up massive opportunities for companies regardless of size or entity type.
To offset lower tax rates, look for the tax writing committees to remove certain business incentives and deductions.
To prevent an increase in the national deficit, Congress will need to eliminate certain business incentives at both the federal and state levels to offset the proposed rate reductions. Rick noted that certain interested parties will be against these tradeoffs. In particular, for states that have generous business incentives such as California and New York, the loss of these incentives could make Congressional representatives hesitant to support a sweeping reform of the tax code.
Considering the interest of all parties at stake, Rick described tax reform efforts as a “heavy lift” and one that will require tough negotiations in the months ahead. However, we can consider today’s plan as the starting point.
About Rick
Former Congressman Rick Lazio recently became the Senior Vice President of alliantgroup, a national tax consultancy. A longtime advocate of small to mid-size businesses, Lazio spent his four congressional terms sponsoring pro-business initiatives such as the Small Business Tax Fairness Act of 2000. After his time in Congress, he held several positions in the private sector. He worked as Executive Vice President and later the Managing Director of the Assets Group at JP Morgan. Rick also served as a partner at Jones Walker LLP, a national financial services law firm, and headed the firm’s National Housing Finance Practice group. He serves on the Board of Directors for Enterprise Community Partners and the Bretton Woods Committee. He also has been an active member of the Committee for Economic Development and the Association for a Better New York (ABNY). Lazio is involved in numerous other business, philanthropic and civil organizations.
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About Rick
