Trump's tax plan largesse extends to law firms
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President Donald Trump’s tax blueprint unveiled Wednesday contains a provision that would benefit law firms.
Under the plan, corporations that currently pay a tax rate of 35 percent would see their rate slashed to 15 percent, the New York Times, the Washington Post and the Baltimore Sun report. The lower rate would also apply to pass-through entities such as hedge funds and large partnerships.
Many large law firms are organized as pass-throughs, the Wall Street Journal (sub. req.) explains in an article previewing Trump’s likely plan. Income and deductions for pass-through LLCs and partnerships pass through to the owners’ individual returns.
If pass-through entities get the lower tax rate, the Times says, lawyers, doctors and other high-income people in partnerships would be able to reduce their tax rate from 39.6 percent to 15 percent.
Other parts of Trump’s plan would eliminate most itemized tax deductions and double the standard deduction of $24,000. It would keep deductions for mortgage interest and charitable contributions for those who decide to itemize, however.
The plan would reduce from seven to three the number of tax brackets for individuals, with tax rates of 10 percent, 25 percent and 35 percent. It would also eliminate the alternative minimum tax and the estate tax.