The newly proposed budget has many changes including a 20% minimum tax on Billionaires. It also includes an increase in Regular Corporation Tax rates from the current 21% to 28%.
There’s only one problem. The reduction in C Corp Tax Rates from 35% to 21% in the 2017 Tax Cuts and Jobs Act is working better than anyone had ever expected.
President Trump’s tax bill was extremely controversial. It reduced taxes not only on C Corps but also on S Corps and middle class Americans.
Most of the tax rates were reduced with the income brackets being expanded to provide an overall tax reduction on both the middle and upper class taxpayers. It also provided the Qualified Business Income Deduction, which meant that owners of pass-through entities like S Corps and Partnerships could receive up to a 20% reduction in their earnings..
Critics of the bill said that it would bankrupt America. We now have proof that it did the opposite.
The nonpartisan Congressional Budget Office (CBO) had predicted that 2021 tax receipts from corporations would be $327B. The government actually collected $372B, an increase of almost 14%.
The CBO had predicted that fiscal 2022 tax receipts would be $353B. It is now predicted that they will actually be $454B, a 28% increase.
After having proof that the tax reduction worked, the new administration wants to again increase taxes on corporations. We can only hope that this proposal doesn’t become a reality.
Let me leave you with this.
Tax Season is finally over and I may be able to get a full eight hours of sleep again. We added two people this year to handle the additional work.
I can proudly say that we made our deadline and handled everything that came in timely. I can also say that we haven’t worked this hard in the last 25 years.
The 2020 amendments caused by the Employee Retention Credits added at least another 35% to our workload. If all of my employees had an extra set of hands, we would have been able to keep those hands busy as well.
This is the time of year when we do the initial tax planning for 2022. I will be calling all of my clients over the next month to initiate the process.
There are many adjustments that need to be made. The increased income from the ERC’s on the 2021 returns have inflated the estimated tax deposits for this year. Those increases may not be necessary given the normal revenue streams that we should experience, and should be adjusted.
As always, if you have questions or issues please don’t hesitate to contact me.
We’re all going to get through this. Let’s get through it together.
Accounting Solutions Ltd. stands ready to complete our mission and purpose of protecting you, your family, and your business. Whether you need Employee Retention Credits, Mergers and Acquisitions Help, Payroll Services, or Accounting and Tax Work, you have but to ask. I’m here and I remain,
Accounting Solutions Ltd.
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