September 26, 2017

‘Pass-throughs’ could benefit under Trump tax proposal

A planned unveiling of proposed tax cuts on Wednesday by President Donald Trump is expected to include a lower tax rate for a majority of business owners.

Specifically, "pass-through" entities could see their business tax rate lowered from a top rate of 35 percent to a top rate of 25 percent, BlumShapiro partner Andrew Lattimer said on a conference call Tuesday morning.

Lattimer said the change could benefit small and medium-sized businesses alike.

Approximately 95 percent of U.S. companies are pass-throughs, according to the Brookings Institution. The term refers to the way business income passes through to owners, who pay taxes on the income as individual income tax.

"These privately held businesses are the lifeblood of employment in the state," said Oz Griebel, president and CEO of the MetroHartford Alliance.

Trump has also stated his desire to lower the corporate tax rate from 35 percent to 15 percent, though some have predicted his proposal will call for a 20 percent rate.

"We've got some big corporations in the state of Connecticut," Lattimer said. "It should give them some more disposable capital maybe that helps with more investing in the state."

However, some worry that Trump's proposal will eliminate the ability for individuals to deduct state taxes on their federal tax return.

The proposal is also expected to add to the national deficit.

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