If President-elect Donald J. Trump follows through on his campaign promises, taxes that apply only to the richest Americans could be eliminated, along with nearly all tax incentives to be philanthropic, the New York Times reports.
Under Trump's proposed tax plan, deductions for all itemized deductions — including charitable contributions — would be capped at $200,000 per couple. The plan also notes that while the estate tax would be repealed, "[t]o prevent abuse, [deductions on] contributions of appreciated assets into a private charity established by the decedent or the decedent's relatives will be disallowed." Such restrictions on deductions would greatly limit the financial incentive for the wealthy to give to charity, financial advisors told the Times.
In addition to repealing the estate tax, the proposal would tax capital gains above $10 million on inherited assets only if or when the assets were sold. As some attorneys and accountants have read it, this would benefit those with a large income-generating inheritance — like Trump's children, who could borrow against it — but not those with a modest inheritance, who in many cases would be likely to sell inherited assets to raise cash. While not explicitly addressed in Trump's tax plan, the gift tax and the generation-skipping tax, designed to keep the wealthy from avoiding paying income tax, also could be eliminated, the Times reports.
"Someone who inherits the family compound, that's great," said Marc J. Bloostein, a partner at Ropes & Gray. "Someone who inherits a business on the auction block, you have to pay the taxes."
Meanwhile, the Times notes, such tax cuts on top of the promised cuts in corporate and personal income tax rates, as well as the potential elimination of the investment income tax that has helped pay for the Affordable Care Act, could result in a further concentration of wealth in America while reducing government revenue needed to fund many of the job-creating projects Trump pledged to support while on the campaign trail.
"This is about less taxes, less government, less regulation. That's what the overwhelming number of people were voting for," said Joe Duran, founder and CEO of United Capital, a national financial services company. At the same time, "[d]ynastic wealth is here to stay, and people don't want to admit it."