~~As expected the Trump Tax Plan released yesterday is very fuzzy on the details. Here are the key points that we know and don't know:
•Top corporate tax rate of 15% - This would be a great benefit to large corporations. For a lot of farm corporations, they are already keeping income at the 15% tax rate so benefit may be minimal.
•Top Flow-Through tax rate of 15% - This could be very beneficial to farmers. However, this is likely to be only the top tax rate on "business income" since Trump is trying to create growth and jobs. Whether this top rate will be applied to rental income for farmers is to be seen.
•Allowing only mortgage interest and charitable donations as itemized deductions - Many farmers do not itemize so this may not create issues for them. However, for farmers with larger amounts of income in high tax states such as California, Oregon, Minnesota, etc. this could create a 3-5% bump in their tax rate.
•Eliminating the estate tax - Sounds great, but we need to see the details. If it eliminates the estate tax, keeps step-up in basis and does not have capital gains tax at death, then farmers will be happy, but we need to see the details. Also, if the gift tax is still in place, then farm families may still have issues to deal with.
Again, details on these proposals are not available right now. President Trump's economic team is meeting daily with Congress on working out these details and we may see the final proposal in the next few months or it may blow up like health care repeal and reform (which may still happen). We will keep you posted.