Name: Live Webinar: Safeguarding Family Wealth and Navigating Legislative Challenges
Uploaded: 2025-05-21T17:16:10.344Z
Duration: 1 h 2 min 44 s
Description: Live Webinar: Safeguarding Family Wealth and Navigating Legislative Challenges

Transcript for "Live Webinar: Safeguarding Family Wealth and Navigating Legislative Challenges": Good morning and good afternoon, and welcome to Safe Guarding Family Wealth and Navigating Legislative Challenges, both by Tijuana Davis. Before we get started, I'd like to go over a few helpful items so you know how to how to participate in today's call. We're pleased to offer live closed captioning throughout the webinar. To access the captions, please use the stream text link located at chat section of your attendee panel. You will have the opportunity to submit text questions to today's presenters by clicking on the q and a tab on the right hand panel. You may send in your questions at any time during the webcast. We have a lot of material to cover, and if time permits, we will make an effort to respond. If we cannot get to your questions, a response will be sent post event. A copy of the PowerPoint slides and a recording of today's webinar will be made available to you via email within four business days. As we near the end of the webinar, we do have a very short survey which will be prompted, and your response is greatly appreciated. At this time, I would like to introduce Cynthia Adams Harrison, managing director of the Center for Private Business Owners at PKF O'Connor Davies. Cindy? Oh, thank you very much, Harlene. And the Center for Private Business Owners at PKF O'Connor Davies welcomes you to this live webinar. The Center for Private Business Owners provides customized services for owners, both personal and business, throughout the business life cycle. Everything from start ups to succession transition and wealth planning and beyond. We also strive to provide value, quality, and news, like, our and webinars like this. Today, we are honored to have with us Pat Soldano, Russ Sullivan, John Gugliada from Family Enterprise USA. Let me introduce I'm so honored to have you with us today. Thank you so much. I know that for our audience listening, this will and and viewing, this will be a valuable, valuable presentation and timely as well. Pat has spent over thirty years providing family office services as an owner of Simrick Family Office Services and later as managing director of the Western Region for Genspring. Currently, miss O'Donnell is president of Family Enterprise USA. Its mission is to promote the growth of generational owned family businesses in The United States, and she's president of the policy and taxation group, which she formed in 1999 that works on tax and economic policies for successful families, family offices, and family businesses. Russ Sullivan is chair of the National Tax Policy Group at lobbying and Brownstein providing unparalleled insight into the legislative and regulatory risks and opportunities related to tax policy. Russ is a Capitol Hill Veteran who spent fourteen years with the senate finance committee, including nine as staff director. He leverages his vast network and industry expertise to devise and execute complex strategies for both nonprofit and for profit clients on a broad range of issues, including health care, pension planning, trade, economic development, and tax policy. John is an experienced business development executive who partners with CEOs of both large and small businesses to grow their top line. After many years of leading sales teams in a corporate setting and as executive vice president and senior vice president, John truly understands what is required to drive results. And it's never accomplished through cutting corners in the short term. It's accomplished through a well thought out strategy, keeping your daily playbook simple. He has worked with companies in multiple industry segments spanning many continents. John holds an MBA from the University of Hartford and is a regular contributor to state economic and workforce development committees. It is my honor and privilege to introduce these three amazing people to our webinar today, and thank you so much for being here, Pat, John, and Russ. Thank you. Well, Cindy, thank you so much for having us. We really appreciate it. Before we start, I just wanna give a little bit more detail on the organizations. So Family Enterprise USA, as you said, is an advocacy organization for family businesses at a national level in Washington DC. We are a five zero one c three organization. We are similar to a trade association, but we we represent all sizes of business and all industries. And we work on tax and economic policies that affect the families of those businesses. And that's how we have partnered with 20 different trade associations around the country to now have over 1,000,000 members. Policy and taxation group is a five zero one c four. It was founded by me in 1995, as Cindy said, to work on gift to state generation skipping tax. That mission has now expanded to all tax and economic issues that affect family businesses, family offices, and successful individuals, and partners, as you can see, with Family Enterprise USA. So what we're going to talk to you about today is John's going to go through some of the survey. Family Enterprise USA is known for its annual survey. It's been doing this since 02/2007. We're gonna talk to you about the Congressional Family Business Caucus that's been recently formed. We're gonna go over some of the results from our most recent Frank Luntz voter survey. We're gonna talk about our priorities in this year. And then we're also gonna talk about the political and legislative update. So with that, I'm gonna turn it over to John so he can give you the background on family businesses and also the survey results. Thanks, Pat. Appreciate it. And thanks, Cindy and Steve and, PKF OConnor Davies for having us. Appreciate it. In addition to the survey, we do quite a bit of research. And as you can see from the first slide on the screen, we found that there are over 30,000,000 family businesses in the country. 87% of the businesses in America are family owned. They represent over 80,000,000 jobs, which is 59% of the private sector workforce. So these are pretty strong numbers. It's 54% of the private sector GDP or almost $8,000,000,000,000. So these are the numbers we use when we go to Washington. Very, very powerful numbers. In addition, as Pat mentioned, we do the the annual survey, which is the only survey I know of for family businesses that makes its way into the halls of congress. I'd like to thank the terrific platinum plus sponsor of our survey for two years in a row, so thank you to them. And thank you for all these supporting organizations, that help us. Without them, we can't get the type of distribution we need to get the responses necessary. So thank you to everybody. So this year, we had 730 respondents. We recovered 45 states. The coverage was excellent. You'll see in the next slide, our businesses also have good coverage. 76% of them are multistate, so they're operating in more than the state that they are located. And very quickly, I'll give you a a a little handle on on how we do the survey. The first two questions we ask, I have one slide which is basically, you know, do you manage or own the operating business? And then the other slide we would usually add here is, you know, what level are you? President, CEO. Again, these are done to make sure we have a good confidence level in who's taking the survey. And you can see here 83% are solar mar majority owners. The other slide would be in the high nineties, that it's either CEO or some c level executive taking the survey. So we're pretty confident we have the right the right group. This has not changed in the three, four, five years, I guess, I've been doing this survey now. Manufacturing, construction, and real estate dominate the top buckets, of the industries. You'll see on the bottom there, you've got agriculture at 3%. Again, we we hear a lot about family farms in this country because of the illiquid nature of their assets. Well, we never pass on the opportunity to let lawmakers know that these other industries share those same, same nature with their assets. And here you can see where there's that legacy, the the will to to, pay back in and and and put money back into the business. So how many years have they been in operation? And you'll see 81% are twenty years or more. 31% are over 50. I've seen that number be as high as in the high forties. So these are legacy businesses. We've learned that. And then here's an important slide because it dominates a lot about what we put our time and effort and resources into. You can see 8080% are pass through entities. So either s corps, LLCs, partnerships, people ask me all the time, well, you guys are very focused on income tax. Well, this is why. 80% are pass through. Very specific slide to the work that we do. This is non family members, So it's very interesting to sit down with an owner who tells you that the grandfather worked here, the father worked here, and the son all worked here over a series of decades. So very, very unique to, family businesses. The net the last two slides I'm gonna show you are are interesting from the standpoint of we always talk about the commitment of family businesses to their community. And a matter of fact, our last caucus meeting, which was last week, it it basically had a theme of, charitable giving and community involvement. So you can see here, we asked, you know, salary and benefits. Did you do you pay more or less? Well, 47% offer the community better paying jobs with better benefits. And then on the next slide, you'll see 72% of the respondents give 60% or more locally. So we learned these folks give, and they are the YMCA. They are the boys and girls club. They are the ball field. So these businesses are very, very intertwined with their communities, and we always, always make sure we let lawmakers know that. With that, I'm gonna turn it back over to Pat. He's gonna give you a little policy overview. Thanks, John. Appreciate it. So we asked the question, what is your tax top tax policy? As John already mentioned, income tax is number one. This year, it was number one. Last year, it's even higher than it was. And as he indicated, that's probably because 80% of family businesses operate as a pass through. So they're pairing ordinary income tax rates, not 21% corporate tax rates. Of course, the state tax is second and then capital gains. But note wealth tax is on this chart, 5%, which is higher than it was last year. This means that 5% of the respondents believe wealth tax is their top tax concern. And so that's really, really important to us. Again, it wasn't even on the radar a few years ago. Now it's it last session of Congress, it was a reality, not so much in this session of Congress. We asked about the estate tax, what's most important to them, what would they like to see happen. They would like to see the exemption at now $14,000,000 per person made permanent. And, Russ Sullivan, we wanna talk about that because that is what's going to happen in in this tax bill that's currently in the house. They'd also like to see repeal. There's it takes a lot of revenue to repeal the tax, so that's probably not likely. And then there is a fair percent that wanna reduce the rate of tax and we believe that's a good option. We've helped congress to introduce legislation through policy and taxation group to reduce the rate of tax from 40% to 20%. In terms of their top economic policy, well, federal deficit is not only at the top again, it's even higher than it was last year. Everyone in family businesses is concerned about our deficit. I say this all the time. They understand what debt does to a company and certainly understand what debt does to the country. Income tax is number two. And then reducing the regulations at number three because we are very overregulated as we all know. And then next is the estate tax. We ask this question because members of congress asked us, what would you do if you had more money, and you you weren't paying as much in taxes? Well, as you can see, 67% said I put back in my business and 21% said I'd pay more to my employees. And only 4% are gonna distribute out to themselves. And this is the reality, most member of the congress don't know. That's why we do this work because they all assume the family businesses would just pay themselves more money if they paid less in taxes. And this slide proves that that's just not true. First year, we asked about tariffs. 44% said, yes, I'm currently affected by tariffs. We just most recently did a pop up poll. This percent has gone up a little bit more. It's it's closer to almost 50% now that have been impacted by tariffs. So I mentioned the wealth tax, and these are some of the slides from the LUNTS survey that we just did. It is important that you know that the country supports a wealth tax. Voters support a wealth tax. In fact, 63% of voters, including 52% of Republicans, support a wealth tax, which is very concerning to us. Now they don't understand what wealth tax really means. They don't probably understand that it means family businesses would also be paying this tax. They really don't know who would be paying it. They don't know who currently pays the tax. Currently, 75% of the taxes in America are paid by the top 25%. And most people don't understand that in the bottom, 50% of Americans pay less than 3% of the taxes in this country. So there is this real disconnect between the actual taxes paid and what the voters do, but this is the reality we have to live with. On the flip side of that, as it relates to the estate tax or the death tax, voters inherently believe this is just a wrong tax. And in fact, this is the highest it's ever been. 67% of the voters, including 60% Democrats, believe that the estate tax is a wrong tax and it should be eliminated. This is the highest I've seen in the thirty years I've been working on this. It's usually in the fifties, the low to the mid fifties. So this is pretty amazing statistics for us. Now, before I turn it over to Russ, I'm gonna quickly talk about the Congressional Family Business Caucus. This is really an important vehicle that Congress formed with our help. It's been in existence now, two sessions of congress working on this session. It is a bipartisan caucus. It is an educational caucus, which is very important, which is why we got 50 members of congress to join this caucus and 40% of them are democrats. We had a meeting that we facilitated, two so far this year, one in March, '1 in May, and the next one in September 17. If you are a business owner and you are interested to coming to DC and telling your story, please reach out to John. We'd love to have you there. This caucus has had an amazing impact in educating not only members of Congress, but voters. We need voters. We can get to voters, they get to members of Congress. So we have this meeting, we record it video, audio, we send it out on all social media, we send it out to our million database, and we, educate as many people as we can about the struggles and the challenges of family businesses. This is the members of the caucus in the last session of Congress. And again, I know the slide's hard to read, but we're gonna share this deck with you so you'll be able to see them. So before I turn it over to Russ, who's gonna give us the the big tax change coming, This is very, very, current information since this is happening as we speak. I want to ask Cynthia if there are any questions. And I'm a assume, Cynthia, if you if you go ahead. There there are no questions at this time. Thank you. Thank you. Okay. Thank you for that. I appreciate it. So, Russ, I'm gonna turn it over to you. Thanks, Pat, very much. Well, we have a lot to talk about regarding taxes for this year in 2025. Why is that? Because president Trump, put it on the agenda in the campaign, and he won. So Trump two point o is off and running. This is not a retread of his first term. The Trump administration was ready on day one. He, came in with people he had already talked to about serving his administration. They were loyal to him, and they have been implementing his initiatives mostly without congress so far. But as you know, the president can do a lot outside of, of, cooperating with congress. There are executive orders that direct the entire executive administration, how to interpret law, what to spend it on, what to look for, what his priorities are in terms of focus and the time of federal employees, and they they set those forth in all kinds of areas, regarding getting ideas for tariffs, regarding energy, expansion of sources in the domestic U United States with respect to, offering buyouts for federal employees, all kinds of issues where he's been, moving quickly. Well, now he needs to pass some legislation to fully implement his economic agenda. So let's take a look at his leaders. He has, several ones, but they've all been very active. Energy is a critical component of this, and Doug Burgum, chairs the National Energy Council. Scott Bessum, the secretary of treasury, is taking a lead role both on tax and tariff issues on the tariff along with the USTR, Jamieson Greer. Kevin Hassett is the brains behind the the tax ideas for this administration, and Ken Keyes is about to be confirmed by the senate for his job at tax policy at treasury. The congress is very close, in terms of Democrats and Republicans. The margin is three votes in each house. That means in both the senate and the house, Republicans, if they want to pass something, they can lose three members of their caucus, and it's still passed by one vote. But if they lose four, they cannot, get the bill passed. And so this means that they, either have to work with Democrats, which they will have to on some bills, but if they want to pass something that is sort of Republican ideology, Republican economic policy that Democrats oppose, they'll have to get virtually their entire caucus to support it. Well, who's gonna do that? Well, there are four key players. Not sure if any of you or your clients are from these states, but we got Louisiana, Missouri, South Dakota, and Idaho. Not many on the East Coast. In the senate, John Thune and Mike Krapel are are seasoned veterans. They've both been serving on the finance committee for fifteen to twenty years. They have been in leadership positions. They've done big bills before, including the 2017 TCJA, and they are ready to roll in the senate. In the house, we have new folks, new faces. It's their first time to do a big bill, Jason Smith and Mike Johnson. So, can they get it done? Well, history would tell us yes. If you look at the last, seven presidents and their first year in office, each one of them has gotten through congress some sort of economic bill. And that bill we can go to the next slide, Pat, and contained a lot of tax provisions. And it didn't matter whether they controlled all the houses of congress. Sometimes they did it bipartisan. Sometimes they did it just with members of their own party. It didn't matter whether you're Democrat or Republican. You can see they got their bills passed, And that's what's going to happen this year, I'm gonna tell you. They are hoping to pass it with just Republicans here in the summer, but if they fail to get enough votes, they'll figure out another way to pass it even if they have to reach out to Democrats. So what are the tax proposals that we're talking about that are gonna be included in this bill? Well, there's sort of three types. The first bucket is they've got to decide what to do about all the individual provisions that were contained in the Tax Cut and Jobs Act was enacted in 2017. You're familiar with many of these, the individual rates and brackets, and those rates will go back up. The top rate will go up to 39.6 if Congress does nothing. The standard deduction is up near 20,000. It would revert back to 10,000. The child tax credit would revert from 2,000 to 1,000 if nothing's done. On the other hand, there would be a tax cut for some because if the bill if the legislation expires, there wouldn't be any salt limitation. You could deduct all your state and local taxes. You can see the other provisions here, including the estate tax exemption, which is currently at 14,000,000, would revert back to 7,000,000 per person. But it's not while it's mostly individual provisions, there are some business provisions, for all businesses regardless of how they're structured corporate or, pass through r and d expensing, deductibility, business interest, and bonus depreciation, have all already expired. But there's also for pass through entities, which many, privately held business, family held business, are structured as is this 20% deduction where you don't have to pay tax on 20% of your profits. We call it one's 99 cap a because that's the code section that it's in. All of those are important provisions, and we've been working on them. The second, bucket is Trump's tax priorities. And he developed these during the campaign, and he's pretty clear. So, on in addition to extending all the ones that legislation that is scheduled to expire, Tom came up with another set of ideas that were focused mostly on individuals. So he said he did not want tax on Tampa, no tax on overtime pay, and Social Security benefits. He also, is that one thing I have to pay deduction. And so he's pushed for a a lot of provisions. On the business side, if we look at his priorities there, he he wants some incentive for domestic manufacturers. And so he's got a provision in here that'll allow new factories to write off their building structures in addition to the capital equipment contained in the buildings. He also is for tariffs and more tariffs. And we won't go into that unless y'all have questions, but, clearly, he has imposed, the highest tariffs in a hundred years in in our country, although his goal is to then negotiate them back down with agreements from those countries to treat US companies fairly, when they're operating overseas, and other priorities. So, the third category really is individual priorities of members, and there are some of those that are going to appear in this legislation as well. So can they get it done? What are the challenges to passing the tax legislation with for the Republicans if they wanna do it on their own? We'll go to the next slide. We'll see. Here's one of the big challenges. It's the federal budget, and we continue to to run a significant deficit every year. After COVID, it looked like we might, sort of tame the deficit, going back to to close to, equilibrium, but it it hasn't happened. And so we're looking at $2,000,000,000,000 increase in the national debt due to a deficit, really as far as the eye can see. This has concerned many Republicans, who are concerned about the fiscal, status of the country. There are four tax cuts, but they don't wanna make, the national debt worse. And in that regard, the next slide, reminds you that we've reached the debt limit. Congress must approve, debt, in our US system. And so the legislation that's currently making its way through the house actually increases the debt limit by $4,000,000,000,000, which would accommodate at least over the next, couple years. The extending TCJA will also cost 4,000,000,000,000, although over a longer period of time, ten years. So what are the Republicans gonna do? Well, they haven't fully decided yet, but they have at least four options that they're working into their bill. One is senator Crapo, who chairs finance committee in the senate says, look. We shouldn't have to pay for extension of current tax policy. We we we know that these tax cuts are in law, and we want to continue them. And when we passed them, we intended them to be permanent. So, that is how the senate's, preparing to move forward. They can also cut federal spending programs, and the house bill cuts really up to about 2,000,000,000,000 in that space of either cutting spending or carving back, tax cuts, mostly on energy tax incentives. If they counted tariff increases, well, they could actually add several trillion dollars to federal coffers. You know, a 10% increase across the board, which is what we have in place right now, should raise about 2,000,000,000,000 on its own. And, plus, we know that some of the countries, Trump has imposed much higher percentage of taxes, of tariffs. Finally, if they get the right economic growth plan, maybe our country can grow, and that will produce significant revenue as well. So president Trump, so far, is convincing Republicans. Let's do a combination of these things. We do think tariffs are are are rising. We know that that's occurring, and we we think that will continue. But it appears that Trump really wants to negotiate those back down and has been introducing, agreements with some of the 40 or so countries where he imposed significant tariff increases with a ninety day delay. You can see, in the next slide with China had the highest, number of of of tariffs. Alright. What are the other tax increases that, possibly on the table? Well, let me just give you an assessment. Some some Republicans actually propose increasing the corporate tax rate from 21%. It is not in the house bill. It is not gonna be in the senate bill, and it's unlikely to end up in the final bill. There was a big discussion you may have read about where some Republicans said, look. If we're gonna have a any limitation on solve for individuals, we ought to have a similar provision for businesses. In other words, you as a business should not be able to deduct all of your, state income taxes, your property taxes to counties or other, entities, or even some of your individual, industry excise taxes or severance taxes or insurance premium taxes. But that after a intense amount of, lobbying on that, it did not appear in the house bill, and I can assure you the senate doesn't wanna do it. So unless they really need a big chunk of money, like several hundred billion dollars, this one's probably not gonna make it. There are some, that, are in the bill, some international tax changes that go after countries that are raising taxes on US companies operating in their jurisdiction. There's a lot fewer tax benefits that'll be available for the undocumented of earned income tax credit, health care tax credit. So we got a big increase in private foundation excise tax, which is 1.38% now. Could go as high as 10 for family foundations that have a billion dollars. They'll just scale up over, depending on how large your foundation assets are. And, there are other topics. There are some who are still arguing to tax high income individuals to in other words, not to keep the 37% top rate, but to increase it, to 39.6 or 40%. So those battles, yet to be finally, resolved. So what happens next? Well, the Republicans decided to go with budget reconciliation. That's their preferred legislative vehicle. They can move it faster through the senate. They also only have to have 51 votes in the senate. So the house committees have marked up their spending and tax bills this week. The house rules committee, actually is considering the legislation. That committee is in session now. They started at 1AM last night. They have not made changes as of an hour ago, but, they will make some changes. They're going to increase the individual SALT cap from 30,000, which is what the Ways and Means Committee bill had, to 40,000. They will also make some additional cuts to Medicaid, and they will carve back some of the energy tax credits and probably a few other things. These are all designed to get votes to make sure that they have 218 votes to pass the bill, on the house floor. So what's the final bill gonna look like? Well, we don't know yet. They're still making minor changes in the house, and the senate could make major changes to them. But I think you can see from this slide some of the key areas. The bulk of the cost of the bill will be in extending TCJA provisions, But there'll be some other business provisions. There'll be Trump proposals on, tax no tax on tips over time, Social Security benefits. There's gonna be expansion in the child credit, probably to at least 2,500 per year from 2,000. And there'll be this individual soft cap. Exactly what offsets, probably won't have enough to fully cover it unless you count the Doge cuts and the tariffs and economic growth. If you count those, then they'll probably be, at least revenue neutral. Alright. So now I'd like to invite Pat back as we'd like to talk about what, National Tax Policy Group has been doing, regarding these particular provisions and how we're faring. So, Pat, if you go to the next slide, maybe you can outline each goal, and I'll tell you where we stand this morning. That's that's Excellent. Well so, yeah, income tax as, we've talked about is a number one issue for family businesses. We really do not want that income tax rate to go up, and we certainly don't want an additional level of tax at the 40% that's been suggested, for people making over a a million dollars a year. So where are we on no increase in income tax? Well, we have a big battle in the house, and at one point, Trump even said he was for, a higher 40% rate, but he backtracked on that. The there's no provision in the bill. So it's at 37% permanently in the house bill. The senate has less interest in raising it than the house, but this will still be talked about. And if the markets don't respond well to the passage of the bill in the house, there'll still be continued discussion about should we have a higher rate for the highest earning, category, maybe even create a new one over a million dollars or $2,000,000. Well, and how about next is the estate tax? Because that's the second most important tax issue for families and family businesses, and everyone's concerned about this. There's some that would like to see it repealed, but that doesn't seem to be in the cards. But what do you think is gonna happen? Well, we had a good progress here in the house. First, we were told that, they might have to, sort of turn off the indexation of the exemption amount. But in the end, they did not need to do that to get the bill passed and and to to meet their budget requirements. But in in fact, they did raise the, exemption amount from 14 to 15,000,000, and they're gonna index it on from there. So a slight increase. The senate seems positively predisposed so far to accept what the house is doing. We hope we can get, John Thune and the the finance committee Republicans to, perhaps, phase in a reduction in the rate. I'm not promising that. It'll be very difficult. It's probably unlikely. But if for some reason they end up with some extra money, we've been encouraging members to, promote trying to make a dent in that, 40% rate. So how about capital gains? That's very important to the real estate industry and other industries that are in hard assets. What's gonna happen there? Yeah. It looks like, no increase on capital gains rates. The TCJA didn't give a big capital gains cut except for on the the lower economic end of the scale where they expanded the brackets at which the zero and the 10% apply. It looks like they will maintain those. Okay. And then one ninety nine a is so critical to these pass through entities. And as we talked about, 80% of family businesses operate as a pass through. So what's gonna happen with one ninety nine a? Well, it's good news here too, Pat. The the, we we spent a lot of time really, explaining this, to members. There's a good debate in the rules committee this this morning with Republicans citing the number of of people who are passed through entities in various congressmen and women's district. Some said, hey. I've got 55,000 pass through businesses who, get the one ninety nine cap a deduction. And they would say things like, there there are not 55,000 millionaires, billionaires in my district. I assure you. This is mostly helping, Main Street people who are, running a fam a small family business. And so they increase the deduction to 23%, which reduces the effective rate, down for the top bracket from 37 down to 29% rather than, 30% as the 20%, deduction does. We'll hope to maintain that in the senate and see if there's room for more. Well and lastly, on this on this chart is the r and d expensing, which is so critical, to family businesses. It has gone away. It's been it's been for the last couple of years. There has not been r and d expensing. So a lot of family businesses are anxious to see this come back. What what's the likelihood? Well, it's a partial, victory here. We it is restored in the, house bill, both on r and d expensive and bonus depreciation at %. But it was not made retroactive when it when it began to expire or expired couple of years ago. So the provision's only, retroactively effective to January of this year. And on r and d expensing, you you only get it for domestic research and development costs. So most, will cover most, taxpayers and and family businesses, but, not quite as good as the old one. Okay. Good to know. So let's go on to the next slide. What about like kind exchanges again? Very important to the, real estate industry. What's happening there? Well, you never know, but, the house was not interested in putting that in the bill despite the fact that it appeared on a list of possible options in the budget committee. So I'm I'm feeling, bullish that that we'll win this battle and that we'll current law will will, allow continued, like, kind of exchanges, as they are today. And we talked about a wealth tax and how, the voters believe in a wealth tax, but family businesses are very worried about this. So you already talked about the surtax of the 40%, but what's the likelihood a wealth tax could come back maybe to raise revenue? You're not gonna do a wealth tax, this year. Republicans are, are not responding to the polls you cited saying that a majority of Republicans support a wealth tax. They they're not gonna pass one, this congress, but we we've got to continue work to make sure that they don't in future congresses. Instead, I think the item that's most at risk would be the top rate. Well, on the last three items on this page, we're really about the situation in last congress. So we were worried about elimination of valuation discounts for family related entities. That was a big concern for a while ago. But what's the status of that now? Yeah. So the, there are no other provisions on estate tax other than increasing it from the exemption from 14 to 15. That means they don't wanna do a step up in basis. They don't wanna get into the rules on grantor trust from a legislative standpoint, or valuation discounts. They'll leave that to the treasury department, for interpretation, and so we'll we'll need to continue to work, with the treasury department to make sure they don't do something that will hurt family businesses in that regard. So let's move on to the next slide so you can talk about, where you think these provisions are gonna end up. You talked about it a little bit, but this is a good recap. Yeah. So just, to be more specific on the items, on the rates, again, we've got some proposals out there, but we're in good shape in the house bill. The SALT cap, the house bill increases that cap to 30,000. I mentioned briefly that, last night, most of the New York Republicans agreed to a $40,000, level. This would not be, doubled for married couples. It's just either single or married. You get up to 40,000. But they, agreed to include, phase out of the benefits of that increase. So they're going to limit the the the those who can qualify for up to 40,000 to those making, 500,000 or less. So at 500,000, the benefit of the higher SALT, cap would begin to phase out over, you know, hundred thousand dollars or so. We'll have to see the details of that when the legislation comes out. The alternative minimum tax looks like they're just keeping the exact higher exemption amounts, and I've already covered the estate tax on that item. On the next slide, we have the business provisions. Again, 23% on the pass through deduction. They do have, some other technical changes on one ninety nine cap a. If you're, working on those for your client or for your your business, you may wanna take a look at those. I think they'll be changed a little bit in the senate, so the senate will look closely at any of these changes. The pass through loss limitation, this is a, an increase that limits, the ability of a taxpayer to use, some of their, kind of, pass through losses against their non pass through or or active income, in order to their w two income. And the rule has been in place since TCJA. The maximum is $2.50 per individual and 500 for married couple. They did include a new provision, in the house that we're gonna have to work on, and that provision actually, limits the ability to convert those excess losses into net operating losses. So if you have been, doing that over the last five or six years in years where you had higher than $2.50 or 500, in excess business losses, then, you're gonna be limited on your ability to convert those to NOLs. We'll be working to try to soften or or eliminate that provision in the senate. And then the business provisions, I think we went over in pretty good details. So let's talk about some of the real in conclusion here, some of the financial consequences of this legislation. Alright. So first, lifetime exemption. There's obviously a big difference between 7,000,000 and 14,000,000 or or now 15,000,000. But, you know, you could actually result in losing $11,500,000 in tax free gifts, if if we don't extend the one that or the estate tax exemption amount. Similarly, there's a big impact from the the top rate. A family owned business with 10,000,000 in revenue that's subject to a 40% rate rather than 37% rate, that's about 2,500,000.0 more in taxes paid in ten years. Two hundred and fifty thousand a year. Significant amount. And then the $1.99 a deduction, again, if it is not extended and that 20% deduction goes away, there'll be, an increase in the amount of a a typical family business would pay, almost, almost a million dollars a year. So, thanks, Russ. Thanks, John. Cynthia, that concludes our formal remarks, but I'm hoping that we have questions. So, Cynthia, if you'll come back on, either the q and a or questions from the audience or maybe your questions. Yes. Please, if you have additional questions, please submit them. We're happy to take those right now. A couple of things you may have already hit on, but to that we're at. What is the public policy argument for eliminating taxes on tips and overtime? This particular viewer sees it as an opening opening a huge loophole for abuse. What are your thoughts on that? Yeah. This is this is Russ. So, a number of people understand that, when you're talking about tips, sometimes you're talking about independent contractors. And so it's always difficult when the person receiving the funds is also the one that's deciding how to classify it as either tip or, other income. And so that challenge does exist. The the policy rationale was articulated pretty well from Trump, as the campaign moved on, and that is he's encouraging work. He wants to reward work, and he wants to build more, manufacturing jobs here in The US. He's focusing on the manufacturing jobs and increasing those by focusing on tariffs and tax incentives for building manufacturing facilities in The US. On the service side, he's focused on this these issues, overtime and tips, and giving, an encouragement to employers to, let their employees work more and to workers to work more, even going beyond forty hours a week and to encourage them. And, despite the the compliance concerns that you this the questioner outlined, this is too popular publicly for members to resist. So immediately after Trump proposed it during the campaign, Democrats in Congress proposed bills to do exactly what Trump was saying, basically embracing that proposal. And it was a Democrat who raised, the the tips bill yesterday in the senate, and where it surprisingly passed without objection on its own, not part of the big bill. Now that's not gonna become law that way because you can't really start tax bills in the senate. They have to start in the house of representatives. But it goes it gives you an indication that people view those who are waiting tables, those are who are taking care of people's hair and nails and other, personal services like that as, folks who are middle income to low income, and they want to encourage them to work harder and more and give them a little tax break. It would also apply to, you know, some some Uber drivers and such. This may have been addressed, but I would like to just expand on it if if you might. The proposed bill amends section two ten c three by striking 5,000,000 and inserting 15,000,000. This relates to the lifetime gift and estate tax exemption. Can you please confirm if the generation skipping transfer tax exemption amount is firmly tied to the same figure? I'm gonna, I'm gonna defer on that saying that I believe that's correct, but, we are you know, we just got the statutory language, just, like, five days ago, when the markup occurred, and we're still studying the details of that. I don't know, Pat, if you've looked at that issue or not. Well, current law is that gift to state and generation skipping are all unified. So unless they make a change to that, which I have not heard is happening, but you spent more time on the bill than I have, Russ. I I would be pretty surprised if they became ununified. I've heard no no one talking about that, and I I I would find it surprising. But, Russ, have you heard anyone talking about it? No. In fact, we did ask the question of, ways and means and the senate staff whether they intended to, to, you know, disengage those. And they said, no. They did not intend to. So I suspect this is just a reconfirmation of, of current law. But, if we can get the, the name of this, questioner, we'll follow-up and and confirm with you. Wonderful. Wonderful. Is Social Security tax free for normal retirement age or early adopters? Yeah. The answer is, that the way they've structured the Social Security provision is not directly tied to your Social Security benefits. So let me explain. In order to get the fast track procedures in the senate and pass the bill with only 51 votes, you you if you're using that process, you cannot actually touch Social Security policy directly at all. So if they had written a provision saying any Social Security benefits, retirement benefits are not taxable, then, you would have they would have, lost the reconciliation protection of the bill, and it wouldn't pass. So they couldn't do that. So what did they do? Well, they work work work with a a congresswoman from New York, Nicole Malliotakis, and they decided, let's increase the stay above the regular standard deduction at the amount that individuals can claim if they've reached Social Security retirement age. Now I think the details of that are influx as to whether that's gonna be, okay, 67, which is the general age, or if if you adopt the early, 62, benefits at a lower amount. But, ultimately, they'll have to to settle that. But they increase the standard deduction by 4,000 for individuals, who, qualify for Social Security retirement benefits. This will not eliminate the tax on on Social Security for all taxpayers, but for some, it will. Because as you know, the first twenty five or thirty two thousand, of income, if you have less than that, you don't get taxed at all already. So it's the people in the next tranche who, might be taxable on Social Security benefits, and, this would effectively eliminate some of that. And if tips are not subject to income taxation, will they also be exempt from Social Security taxation and not be treated as Social Security earnings? Great question. And the and the answer is that the the law that the houses put forward does not exempt, the tips or the overtime from SE tax, from your from your Social Security tax. And let me be more precise. Employers will, have to, pay Social Security and Medicare taxes on those tips and on both from the business side and withhold for the individual side. So they'll only be exempted from federal income tax. And, again, the rule here is because they cannot affect the Social Security trust fund directly. And if they exempted it, since those those taxes go into the Social Security trust fund, they cannot include that in this particular piece of legislation. Wow. Thank you. There are widely different opinions on the impact of tariffs on the average American. What are your thoughts, speakers? Hi, John. Y'all been talking to lots of companies. You wanna start on this one? John? Yeah. I mean, my my mailbox and my, my inbox and my phone has been ringing, with the tariff situation, from when it started. But I think the biggest thing about the tariffs right now in terms of the people I've spoken to is just the uncertainty. And I think it's very difficult, as you can imagine, for a lot of these business owners to plan anything when surrounded by this, you know, consistent uncertainty in terms of what's going on. So, we have family businesses that feel that they're in a good position with the tariffs, and we have others that, you know, will negatively be impacted by them. But, again, the thing I continue to hear, in my travels is, the uncertainty of of the tariffs themselves. Alright. Well, let me give you a little behind the scenes Washington, information. So when when Trump imposed the the broader tariffs, he called them reciprocal tariffs on, you know, most country most of our trading partners around the world. Some as high as 50%, and China, you know, well above that. The treasury department soon came back to him, secretary Sullivan, and said, mister president, I believe you're gonna need to pause these tariffs because it could have significant adverse impact to our markets, our capital markets. And there's the uncertainty about it is causing people to withdraw from making investments and all. President Trump listened to him and put in this ninety day pause in which he said we're gonna try and negotiate with with as many countries as they can. So I I think that tells you that, what John is hearing, from some of the uncertainty is correct. And I think most of those tariffs will be negotiated back down to a level 20%, something in that range for most countries. Not China. I think China, they they could still be significant, as we really deal with other issues, that are problematic in The US China economic trade relationship. Thank you. Any further questions? I'm not necessarily seeing any further questions right now. What are so if I am a private business owner, what are my biggest takeaways and or what can I do to have my voice heard through your work? What would be some best next steps for me to take? Well, I'll answer that. Of course, as we mentioned, what we want you to do is we want you to come to DC. We'd love you to meet with your members of congress, rearrange new visits for you. We'd love you to consider sitting on the panel if you're a family business owner, at the next, caucus meeting that we facilitate for the congressional family business caucus members. I can't encourage people enough to meet their member of congress either in DC or in their district, share with them your challenges as a family business owner, bring them to your operation, whether it's your office or your plant or your facility, let them talk to your employees. They wanna see constituents. They wanna understand what you're doing. Write letters, emails, go on our website. We have calls to action. You really have to let your voices be heard. And members of congress, as Russ can attest to, working the hill for decades, they do listen. They do wanna hear from you. And if they don't hear from you, they're gonna think that they're, you know, there's no challenges that you're facing or they won't know the challenges that you're facing. So I can't encourage people enough. That's why we we do what we do. We are the voice for family businesses in Washington DC, the families of those businesses, as I said earlier. So please let us help you. We feel free to reach out to any of us. And again, if you're coming to DC, let us know. We can help to facilitate those meetings for you. Oh, that's wonderful, Pat. And another follow-up question here. Regarding +1 99 why don't they remove the SSTB limitations as many small businesses are SSTBs? Great question. And, there are some who have been advocating for those changes on Capitol Hill. I will just say that, in 2017, the senate finance committee Republicans decided that, they really did not wanna provide the these benefits to most of the service industries, not all of them, but most. And they did not want articles about lawyers and doctors and lobbyists and accountants and others, getting the full benefit of it. They really wanted it to go to those who were engaged in making something, growing something, that kind of thing. As you may recall, the the, one ninety nine cap a replaced the old section one ninety nine, which was limited to manufacturing, businesses, and the their profits. So they expanded a little bit, but this year, they're not going to, expand one ninety nine a and allow all, service providers to to claim it unless they're under the the income caps that are in place under one ninety nine a currently. Sorry. Well, Thank you so much. I'm I'm wondering if we have follow-up questions that come up. Can can we make sure that you can address those directly with our attendees? Sure. We're happy to do that. You can either forward them on to us, or you can provide our contact information if you wish. Oh, that would be wonderful. So if there I am, you know, a few hours things settle in and somebody has a question that they can reach out to you directly and and have that response. Okay. That would be excellent. Thank you. This is another question. Do you do you also offer family foundation sessions? We we do not. I mean, we have a lot of family foundations that support our work and that we work with, but we don't offer the foundation sessions. I'm not sure if what you're talking about is education around foundations. No. Okay. Alright. Thank you. No. But, Cynthia, I would say, if you have a family foundation, ask your, you know, your wonderful accountants at PKF OConnor Davies to help you figure out whether, this increase in the excise tax will have a significant impact on your family foundation. Perfect. Thank you, Russ. As we are approaching 01:00, boom, just right into that. I wanna thank you so much for amazingly beneficial information that I know is currently in flux and changing and so appreciate your efforts in putting this together for our audience. And we appreciate also that you will be, you know, able to answer any questions that may continue to to surface. And, hopefully, people will have a voice and get involved and and do what they can to best benefit themselves and obviously other family owned enterprises. So we thank you so much for, all of you, Pat, Gugliada, and and Russ. Truly appreciate your work on this. Thank you, Cynthia, for the opportunity. We really appreciate it as well. Alright. Thank you to our speakers, and thank you everyone for attending. If you have not already completed it, we have launched our survey located in the survey tab of your panel. Once again, a copy of the PowerPoint slides and a recording of today's webinar will be made available to all attendees within four business days via email. Thank you again. Have a great rest of your day.