Baird rep says biggest effect of tax overhaul will be felt by businesses
Baird’s director of advanced planning says the biggest effects from the federal tax overhaul will be felt by businesses rather than individuals.
“This tax reform bill was primarily a business tax-reform bill,” Tim Steffen said at a recent financial planning discussion held in Madison by the Milwaukee-based financial services firm. “There were plenty of changes for individuals, but the really big things will affect business most significantly.”
One of the biggest changes -- the reduction in the top tax rate for C Corps from 35 percent to 21 percent -- is seen by many proponents of the bill as making American firms more globally competitive.
And as Steffen pointed out, pass-through business owners get a break as well.
“The theory here is that reducing taxes for business will leave more money for them to reinvest in the business, hire more workers, pay their current workers more, etc. which will then grow the overall economy,” Steffen said. “The validity of this economic theory will be found out over the next few years.”
While the Tax Cuts and Jobs Act made many changes to the individual tax brackets, there were “essentially no changes” to the tax rules on capital gains, Steffen noted.
“The biggest issue still hanging out there is what’s going to happen after 2025, when most of the individual tax provisions are scheduled to expire,” he said. “We expect most of them will be extended, perhaps permanently, but who knows.
“This bill took many steps toward tax simplification,” he continued. “Not as many as we had hoped based on some of the earlier versions of the bill that we saw, but there were definitely steps in the right direction.”
Watch a webinar with Steffen on the impact of the new tax legislation on investors: http://www.rwbaird.com/taxreform
--By Alex Moe