Tax Planning Boost is Likely Due to Election Results

Many people in the tax planning industry were expecting a democratic win and big changes in tax policy.

With Trump’s victory, many of those same tax planners are expecting no changes and extensions of the policies that were going to expire in 2025. Although some things will likely continue as they are now, it will not be as simple as an automatic extension of all policies.

The reason that the policies were going to expire at the end of 2025 is that any time the government reduces projected revenues (tax reduction) they have to also have planned in a replacement to that revenue or have plausible growth because of tax policy that will balance the budget. When Trump placed the TCJA reductions, the projected growth in revenues to cover the reductions were from growth in GDP and other incomes, but were met with COVID instead, and the resulting drastic increase in government give-aways and huge growth in the deficit.

Tariffs and other items are expected along with reductions in “red tape” for business (not always good for the environment or global warming), but those things alone will not be enough and with interest rates on our national debt at decade highs, the country is in a “margin squeeze” like never before. The border wall and immigration issues that Trump is taking on also have a front-end cost that long term will likely be beneficial economically, but we still need the cash up front to execute policy, so it’s about the timelines being short and the projected benefits long that will be the uphill climb we face.

Tax planning will be a moving target, and more than ever before, people will need to have a solid relationship with a tax planner that is proactive in nature. Most accountants are tasked with too heavy a workload already and there are too few quality accountants around, as that industry has a high retirement rate and a low level of new accountants entering the craft.

The financial advisor Industry is rallying and trying to fill the gap as proactive thinkers; taking courses, developing software and using back office subscription services to help them move to the forefront of tax planning, working in tandem with accountants in partnerships. Find your source and get ready for change!