Question

3. What is the new "pass thru" tax deduction? Which entities does it apply to?

4. Do you think that by reducing the corporate tax rate it will help or hurt the United States?

Answer 1

1) The new "pass thru" tax deduction allows taxpayers of non-corporate to deduct up to 20% of their qualified business income, plus 20 percent of qualified REIT (real estate investment trust) dividends and qualified income from PTP (publicly traded partnership). The deduction will be allowed to effect in tax years beginning Jan. 1, 2018, or after. The entities eligible include pass-through entities (such as LLCs, S corporations, LPs, GPs, etc.), sole proprietors, and specified trusts and estates

2) In my opinion reducing the corporate tax rate will be helpful to U.S. The bill reduces the corporate tax rate from 35 percent to 21 percent; therefore ensure that rates of tax on income from "pass-through" businesses (including sole proprietorships, partnerships, and S-corps) would be reduced. This will provide an incentive to employers for creating more job opportunities; thus in turn giving people more money to spend in the economy.

The businesses can also reap the benefits of involve expenses that which can now be write off to save more money on taxes. It includes the interest paid on loans, full cost of new equipment, and charitable contributions. The reduced tax rates, taxation only on earnings made in the U.S., and the ability to write off investments means more capital for the companies thus increasing the wages of middle-class through pay raises and more hiring.