A Guide to Tax Reform
The tax system in America is one that is constantly under scrutiny from the public and politicians alike. This is because our tax code is extremely complicated, and the system of filing taxes is not only a burden for citizens, but a costly venture for the government. Many politicians are elected into Congress and the White House because of a promise for tax reform. However; tax reform is something that should work to benefit the people. There are certain parts of the tax reform plan that is being presented by Congress that does not benefit the American people.
One of the things that has been a huge benefit of people in America is a 1031 exchange. In a 1031 exchange you do not have to pay tax on the equity you have earned from a property if you are using the proceeds of the sale to by a new property. The 1031 exchange has allowed businesses to expand their operations within America, and homeowners to be able to purchase a new house without having too large of a mortgage burden. This is part of the tax reform that is at stake of being taken away. Check out this website at http://dictionary.reference.com/browse/taxation for more info about taxation.
Without the 1031 exchange, you are going to have to pay capital gains tax on the equity from any property you sell. Even though you would be using the proceeds of selling your home to buy a new home, this tax reform seeks to take a cut of the initial sale you made. People that have been paying property tax and will be paying property tax again should not have to pay this tax and limit the amount they can spend on a new property.
There are some measures that you can take if this small business owners tax reform is something that you do not think is a good idea. You are going to want to reach out and speak with the representatives from your state. This is the type of tax reform that is not only going to hurt business, but it has potential to hurt anyone that owns property.
The business interest deduction tax system in this country is a burden and it should be simplified. However; not all tax reform that is being proposed will actually benefit the people of this nation. If we were to lose the 1031 exchange, people will unjustly have to pay tax on the sale of a property, despite the want to use those funds to buy a new property.