What Does the Election Mean
What ill happen with income and estate taxes after the election
President Trump is only the second president in history after President Grover Cleveland in the late 19th century to be reelected after being defeated previously. We currently see that the Senate will likely have at least 52 Republican seats and most likely 54 and perhaps 55. The key vote will be in the House to see if it remains Republican.
Assuming the House goes Republican then the tax outlook over the next two years appears to be positive for farmers. The Lifetime Exemption for estate and gift tax purposes will likely be made permanent at the current $13.99 million level (indexed).
Many of the Tax Cuts and Jobs Act tax cuts will either be extended or made permanent. President Trump’s proposal to eliminate taxes on tips, overtime, and social security likely will not pass since the budget hit on those proposals are easily $2-3 trillion over 10 years.
Increasing the corporate tax rate to 25% with a lower tax rate of perhaps 15% for the first $200-500,000 of income could happen. Plus, a flat 15% tax rate for corporations who manufacture products in the US including farmers could happen.
However, this is way too early to surmise what will happen, but the bottom line is that taxes will not be going up for at least 4 years.
On the negative side we have already seen a drop in soybean prices due to the implied tariffs that President Trump will impose on Chinese imports which will make China skip buying as much US soybeans. However, this will then be offset with MFP round 2, 3 or 4.
If the House stays Republican there may be an effort to pass a Farm Bill in the Lame Duck session. If so, it will be more like the House proposal than the Senate. Also, the FARM Act may have a good chance of passing with some changes.
We will keep you posted, and we will have plenty to blog about over the next two years.