On Wednesday, April 25, the Philadelphia Inquirer will host a long-awaited tax panel featuring La Colombe Coffee entrepreneur Todd Carmichael and a host of state-and-local tax experts.
Carmichael, a onetime tax accountant and lawyer, turned away from that career in the early 1990s to found his first La Colombe coffee shop in Center City. What's his take on taxes in Philadelphia? He'd like to pay more. The better the city is doing, the better his company will do, he said. And it all starts with upgrading the city's schools.
Carmichael will speak on Wednesday as part of the panel and defend his views (which he editorialized in the Inquirer). At the session, at the Ballroom at the Ben, 834 Chestnut St., from 11 a.m. to 2 p.m., we'll also discuss:
Stock markets. The markets have rallied somewhat after the Tax Cuts and Jobs Act, although investors maintain a wait-and-see attitude regarding whether a tariff and trade war will blunt the impact of corporate tax cuts.
"The reduction in corporate tax rates is still not fully priced into companies' bottom lines," said Tracy Maeter, global investment specialist at JPMorgan Private Bank Philadelphia. Jeff Mortimer, director of investment strategy at BNY Mellon, said it's surprising that investor clients "never ask me about the benefits of a tax cut. Many have been bears on this whole ride up." Both are bullish on stocks. But as to the impact of tax cuts on earnings, "it's way too early to tell. It will take quarters to play out," Mortimer said. "Tariffs or the threat of tariffs may be slowing those down a bit."
Donor advised funds. These are proving extremely popular as a way to give to charity under the new law. "People who are charitably inclined can bunch deductions into one large gift into a donor-advised fund, you don't have to file a tax form that's required from a private foundation, and you can spread out donations over time," said Richard Schwartz, JPMorgan Private Bank's new head wealth adviser. "Donor advised funds are less burdensome than a private foundation in terms of cost, as well."
Top tax changes for businesses. Businesses "all want to take the 20 percent deduction" and are wondering whether they should change their corporate structure. "That's the biggest question from the smallest to the largest," said panelist Saba Ashraf from Ballard Spahr law firm.
"This is really a corporate tax plan," said panelist Raman Mahadevan of Ernst & Young. "The most significant change dropped corporate tax rates from 35 to 21 percent. It makes us globally competitive. The cost of doing business in the U.S. has gone down quite substantially."
The Tax Cuts and Jobs Act also provides a large new tax deduction for owners of pass-through entities. But it also reduces or eliminates many business tax breaks. Some of the key changes, according to Isdaner & Associates:
Top tax changes for individuals and estates. The new law makes small reductions to income tax rates for most individuals, and significantly increases estate tax exemptions. But there's some bad news for individuals: The law eliminates or limits many tax breaks. In addition, much of the tax relief for individual taxpayers is temporary. Here are some key changes, according to Isdaner; except where noted, these changes will expire after 2025:
You can find the schedule and register for the event at www.philly.com/financeevent.