Trump corporate tax plan could be a boon for advisory firms

For some advisers who structure their practices so that revenue is reported on their personal income tax returns, Mr. Trump's idea represents a significant tax break

Aug 18, 2016 @ 1:36 pm

By Mark Schoeff Jr.

Republican presidential nominee Donald Trump wants to tax all corporations at 15%, a rate reduction that could be a boon to some investment advisory firms.

For advisers who structure their practices so that its revenue is reported on their personal income tax returns, Mr. Trump's idea represents a significant tax break.

Currently, so-called pass-through entities, partnerships, limited liability corporations and S corporations are taxed at individual rates, which can be as high as 39.6%, the top individual bracket. Traditional corporations are taxed at a 35% rate.

Although Robert Braglia, president of American Financial and Tax Strategies Inc., doesn't support Mr. Trump for president, he does like Mr. Trump's corporate tax proposal. His advisory firm is set up as a pass-through.

He said that Mr. Trump's idea would spur economic growth.

“It would lower my taxes,” Mr. Braglia said. “It would help all businesses. It would help all consumers. It's a double benefit.”

Doug Stransky, a partner at Sullivan & Worcester, agrees that lowering taxes for small businesses, which he calls the top job creators, would “stimulate the economy.”

“It's a fantastic proposal,” Mr. Stransky said. “More money can go into the proprietor's pocket and can be put into the business.”

Democratic presidential nominee Hillary Clinton takes a different view, asserting that Mr. Trump's proposal would allow the wealthiest Americans to cut their tax bill by more than half.

“That would let millionaires and billionaires like [Mr.] Trump pay a lower rate than millions of hard-working families on this income,” a Clinton campaign fact sheet states.

Joseph Clemens, president of Wisdom Wealth Strategies, which is set up as an LLC, said that he favors lowering corporate rates but has misgivings about reducing them to 15% for pass-throughs.

He said that it could encourage “games” business owners play with firm structure to maximize tax benefits, while ordinary income remains taxed at a higher personal rate.

“I do have concerns about the fairness of this,” Mr. Clemens said. “It's already a gray area: What is income? What is dividends?”

With Mr. Trump trailing Ms. Clinton in most polls, the prospects for Mr. Trump's tax proposals and other ideas becoming policy are clouded. But ideas that are floated in the campaign could pop up again next year, if Congress undertakes broad tax reform.

One of the usual sticking points in such efforts is the disparity between the tax rate for traditional corporations and that for small businesses.

“The biggest thing [Mr. Trump's idea] would do is solve this incongruency in the tax code,” said Palmer Schoening, chairman of the Family Business Coalition. “It would end the scrum over tax reform.”

The outcome of the election will go a long way in determining how tax reform will unfold, with the scenario of a Clinton White House, a Republican House and a Democratic Senate providing the most uncertain atmosphere.

Mr. Braglia is holding out hope for a streamlined tax code.

“A simpler tax system would free people up to make better widgets rather than rearranging numbers on ledger sheets to lower taxes,” he said.


What do you think?

View comments

Most watched


Young professionals see lots of opportunity to reinvent the advice experience

Members of the 2019 InvestmentNews class of 40 Under 40 have strategies to overcome the challenges of being young in a mature industry.


Young advisers envision a radically different business in five years

Fintech and sustainable investing are two factors being watched closely by some of the 2019 class of InvestmentNews' 40 Under 40.

Latest news & opinion

Target-date fund design may be wrong for retirees

Researchers suggest the funds don't adequately hedge against sequence-of-returns risk in retirement.

InvestmentNews' 2019 class of 40 Under 40

Our 40 Under 40 project, now in its sixth year, highlights young talent in the financial advice industry. These individuals illustrate the tremendous potential of those coming up in the profession. These stories will surprise, entertain, educate and inspire.

New Jersey fiduciary rule: Pressure leads to public hearing, comment deadline extension

Industry push results in chance to air grievances on July 17 and another month to present objections.

Galvin to propose fiduciary rule for Massachusetts brokers

The secretary of the commonwealth is proposing a fiduciary standard in response to an SEC investment-advice rule he views as too weak.

Summer reading recommendations from financial advisers

Here are some books that will keep you informed and entertained during summer's downtime


Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting It'll help us continue to serve you.

Yes, show me how to whitelist

Ad blocker detected. Please whitelist us or give premium a try.


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print