Professions that are probably going to win big from tax reform

The measure has been criticized as a boon to the 1%.

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The measure has been criticized as a boon to the 1%.
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Jeff J Mitchell / Getty Images

  • House and Senate Republicans have worked out a final tax plan, which includes a 20% deduction for certain pass-through businesses.
  • Republicans have presented the provision as a benefit for small business owners, but some experts have criticized it as a boon to the 1%.
  • Small Business Labs estimates the plan’s pass-through policy will primarily benefit top earners.

The finalized Republican tax plan throws a 20% tax deduction the way of pass-through businesses.

Pass-through businesses – including LLCs and S-corporations – don’t pay corporate taxes. Instead, income “passes through” to the owner, who then pays taxes on the earnings.

The House initially proposed a 25% reduced tax rate on business income from pass-through businesses, while the Senate’s initial plan called for a 23% deduction.

Business Insider’s Bob Bryan reported that Republicans have presented the provision as a benefit for small business owners. It includes guardrails designed to prevent firms such as hedge funds from claiming the deduction.

But the measure has been criticized by some as a boost to the 1%. According to Small Business Labs, this provision will likely benefit the wealthiest of pass-through business owners, but not highly-paid professionals who run “service firms,” including doctors and lawyers.

Here’s a look at some occupations that are likely to benefit most from the plan:


Tax accountants and attorneys

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Justin Sullivan/Getty Images

Politco’s Bernie Becker reported the new plan is causing “real-world turmoil” as everyone scrambles to figure out how the bill affects them. So tax attorneys and accountants will likely see a boost in business – even the bill itself doesn’t contain any tax-related goodies for them.


Real estate development fund owners

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Neville Hopwood/Getty Images

Business Insider’s Bob Bryan reported that the provision “would allow owners of business that hold certain types of depreciable assets, such as real estate, to receive a significant deduction on their profits.”

Small Business Labs reporters the owners of “very profitable” real estate development firms will also benefit from the plan.


Some small business owners

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Toby Melville/Reuters

Small Business Labs predicted small business owners in the 35% or 39.6% tax bracket – meaning those who make over $416,700 a year – will see “a tax reduction on their business income.”

Small business owners earn an average annual salary of $68,897, according to PayScale.


Some freelancers and contract workers

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Christopher Furlong / Getty Images

According to Small Business Labs, most consultants – freelancers or other contract workers who are not paid as employees – will not be able to find a way around the plan’s “guard rails.” But they predicted some high-earning consultants may slip through and benefit from the policy change.


Architects and engineers


Small brewers and distillers


Christmas tree farmers

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Sarah Jacobs/Business Insider

Restaurant owners

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Larry French / Stringer / Getty Images

Plumbers

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Justin Sullivan / Getty Images

Miners

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Justin Merriman/Getty