By Tyler Durden
According to an analysis from the Tax Policy Center, the Senate’s recently passed tax plan will increase the after-tax income of folks in every income bracket. Of course, there are exceptions to every rule and plenty of arguments to be had between the Left and Right over how the tax savings scraps should be divvied up, but in the aggregate individual tax payers should see their net incomes increase in 2019.
But when it comes to the taxation of business income, one group of small business owners is about to get a massive tax increase, on a relative basis, compared corporations and other pass-through entities: Family Trusts.
As the Wall Street Journal points out this morning, many small businesses in the U.S. are organized as family trusts as a way to preserve an enterprise for succeeding generations, protect against estate taxes or a divorcing spouse or other claimants who might try to seize a stake. But while the Senate tax bill provides a massive tax cut for corporations and individually-owned pass-through corporations, small businesses organized as family trusts will see no changes making them much less competitive on a pro forma basis.
Family-owned businesses represent a large slice of …read more