WASHINGTON -- President Trump outlined his plan Sept. 27 to fundamentally rewrite federal tax regulations, promising to "cut taxes for the middle class, make the tax code simpler and more fair for everyday Americans."
The proposal was presented in broad terms, far shorter on details than it was on general principles. But included were specific measures with profound implications for businesses.
Here are some of them.
1. Lower corporate rates overall
Larger c-store businesses could get a big break. The highest taxation rate for corporations would be lowered to 20%.
2. Big breaks on equipment updates
As a means of jump-starting the economy, Trump’s package would allow companies that invest in new equipment to write off the expense in the same year they make the purchase, greatly accelerating the amortization. That break would run for five years. It would come at a time when many c-stores are looking at upgrading fuel pumps with new technology to improve operations and stay competitive.
3. Defanging the estate tax
The c-store industry has been clamoring for decades to end or soften the so-called death tax, a stiff levy on businesses that pass from one generation of a family to the next as an inheritance. Often, the tax is so high that the enterprise has to be sold to meet that financial obligation.
Trump did not specify whether the estate tax would be scrapped or merely reduced. But he pledged, “We are not going to allow the death tax to steal away the American Dream from these great, great families.”
4. More disposable income for consumers
The biggest impact of the tax overhaul could be a surge in consumers’ spending power. Trump proposed that individuals not pay any taxes on their first $12,000 of income ($24,000 for couples), an instant increase in their disposable income.
He also called for bigger credits for expenditures like child care, which again would leave a family with more spending power.
Less clear was the impact of reducing the number of tax brackets from seven to just three.
5. Rolling back rates for S-type corporations
Small businesses owned by a single proprietor, a classification that covers many restaurants, file as S-type corporations. Their tax rate is currently at 35%. Trump’s plan calls for dropping that rate to 25%.
6. Other elements of the proposal would:
- Partially limit the net interest expense deduction for C-corps.
- Eliminate the domestic-production deduction (Section 199) as well as the elimination of numerous other exclusions.
- Eliminate the corporate Alternative Minimum Tax.
The plan was presented as a series of goals rather than a set piece of legislation, meaning much could change during the process of actually drafting a tax bill.
"It will still be a while before we see actual legislation as the relevant committees get to work on filling in the details of this outline," said Jon Taets, NACS director of government relations.