As a fledgling US small business owner at Stinson Orthopedics Inc., (www.stinsonortho.com), this tax plan is by, of, and for the American people and job creators. If enacted, it’s a massive game-changer for job-creating businesses across the country. Below is an email I sent to our team members reviewing the plan and impact on a typical US small business.
- Corporate tax:
- 15% corporate vs. 35%
- Territorial tax: US companies will not be subject to worldwide income tax. Great for global operations.
- 1x tax of overseas repatriation: unknown rate
- Small, medium sized LLC businesses covered at same 15% rate
- Personal tax:
- 3 brackets: 10%, 25%, 35% (income brackets to be defined)
- Double standard deduction: $24k no tax. Zero tax rate for first $24k for couples.
- Child and dependent care tax credit:
- Repeal AMT
- Capital gains rate: 20% (3.8% Obamacare repeal)
- Repeal the death tax
- Eliminate tax breaks (charitable, mortgage, and retirement savings will be protected). State and local taxes, and health care insurance will not be deducted (I imagine there will be a refundable individual tax credit-will force market discipline on health insurers…drive down premiums..motivate consumers to shop..more provider reimbursement pressures good for provider risk-sharing and longitudinal care management we support).
If enacted ‘as is’, here is my view of the impact on our business:
1. Stinson will be able to pay 15% in US on US income only, and 12.5% in Ireland on our European income. This makes our business more efficient, more profitable and allows us to support Stinson Foundation activities to provide job training for military veterans, support care for the mentally ill, empower disadvantaged youth with school choice, and help former addicts/reformed felons secure job training and jobs.
2. Child care and dependent care tax credits will make it easier for Stinson to employ young nursing school graduate who wish to have families while working with us. Similarly, it makes it easier for young women to start their families and pursue interesting work.
3. Capital gains reductions will allow Stinson employees (who own equity) to realize more of the fruits of their labor when we can generate liquidity for shareholders.
4. Repeal of deductions for state and local taxes will motivate our company to move more operations and employees to no income tax states like Texas. Small businesses will continue their exodus from California, New York, and Illinois for relocation to Florida, Texas, and Nevada in particular.
5. Replacement of health care benefit deduction with a likely capped individual refundable tax credit will mean gold-plated health insurance will be taxed to the individual as income…this is going to motivate consumers to select high deductible health savings accounts in which people properly assume more responsibility for their health care decisions and keep more of their own income. Further, employees at companies with gold plated insurance premiums will demand their employers re-direct the excess, now taxable insurance premiums to their own taxable bi-weekly pay checks. The health care industry effect is also powerful: a capped refundable tax credit would likely reduce health insurance industry revenue and average premium costs (no more gold-plated premium revenue), and therefore motivate commercial payers to more aggressively focus on quality outcomes, utilization management, and pricing transparency especially for high cost procedures or conditions. This payer cost management trend, that is already underway, will only accelerate provider risk-sharing for episode of care programs like orthopedic management that we support. In this way, physicians and surgeons become appropriate quarterbacks of longitudinal and/or episode of care (e.g. total joint surgery).
In short, these tax reforms are ALL positive for all Americans, small businesses and their dependents, and our stakeholders starting with patients and surgeons.
Let’s encourage our elected representatives to put American’s first, not the government.