The 2017 Tax Reform Act will likely benefit business, according to panel of tax experts convened by Delaware Business Times on Sept. 13 as part of a partnership with Bank of America.
Many changes are more modest than sweeping for business, the panel agreed.
"'Confusing?', yes, but the impacts of tax reforms are not bad," said Mitchell Drossman of US Trust, a private wealth management subsidiary of Bank of America. "Numbers are not necessarily bad. Six percent of taxpayers are worse off, including 16 percent of the top one percent, but, for most Americans, there's no harm and possibly really positive changes."
Some accountants were skeptical of claims that the reform bill would reduce itemized deductions, but so far that prediction has proven true.
"Some 90 percent of filers appear to be using the standard deduction now, just as the government forecast," said Lisa Hastings of Faw Casson, a regional Delaware public accounting firm.
In looking at the larger economy, both small business owners and wage earners "are not back where they were pre-recession," said Valerie Middlebrooks of Belfint, Lyons, Shuman, Delaware's largest independent local public accounting firm in accounting revenues.
"The focus of public affairs discussion is right where it should be, on job creation," said Mike Bryan, a New Jerseyan who heads tax for Deloitte Tax. "We're telling policy-makers, "˜don't worry about stealing businesses from other states. Rather, give businesses in your own state a reason to stay!'"
With the aging of the Boomer Generation, the tax reform act really did not seem to materially change the scenario for business sales, the panel agreed. On one hand, taxes on capital gains went unchanged, so no "trigger event" to a sale was increased. On the other hand, the reduction in taxes for many people do make it modestly more favorable to sell right now.
"They're right," said David Bernstein, principal in RLS Associates, Delaware's largest and oldest independent investment banking and merger-and-acquisitions intermediary firm. "But the temporary increase in the exemptions in estate tax, doubling from $5.5 million to $11 million per person in the tax reform act "“ although it expires in several years "“ makes it a good time to talk with your advisor about becoming more liquid in your assets, and perhaps staging a gift or gifts to your heirs."
Ken Lewis, a University of Delaware economics professor and economist, and a member of the Delaware Financial Advisory Commission, addressed low growth numbers in Delaware.
He noted that economists already are anticipating a recessionary-quality downturn in their planning for fiscal 2020, beginning July 1, 2019, a precautionary and conservative move to keep spending in check and anticipate recession-related public sector spending. Lewis also noted that with growth in wages and salaries forecast nationally greater than four percent annually, Delaware continues to trail in such growth by about one percent, at greater than three percent annually.