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"The upfront deduction is the thing that gets people's attention," he argued.
The upfront deduction would allow businesses of all sizes to keep more money now and would give large corporations, many of which are sitting on cash because of uncertainty about the economy, an incentive to spend and invest.
In contrast, the upfront deduction is the clear winner if, like many retirees, you expect your tax bracket to be lower when you withdraw the money.
The upfront deduction will have little value, and all withdrawals may be taxed at a much higher rate decades from now.
In addition to the payouts, the donor gets juicy tax breaks: an upfront deduction for the share of the trust projected to go to charity by law at least 10%–and the ability to sell the assets in the trust without taking an immediate capital gains tax hit.
With a tax-free Roth IRA, you don't get the upfront deduction, but both earnings and withdrawals are tax-free as long as you're at least 59 ½ and have held the Roth for five years.
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There are a wide range of corporate deductions, involving special depreciation allowances and upfront deductions for capital expenditures, which are also ripe for cutting back.
Donors receive upfront deductions of 40 to 50percentt for their gifts, while foundations are exempt from local and state taxes as well as from taxes on their investment income.
Contributions to traditional I.R.A.'s, which offer an upfront tax deduction in exchange for being taxed at ordinary income rates when money is withdrawn, would stop under the White House's plan.
At the time the trust is created, you also get a small upfront tax deduction.
You get no upfront tax deduction for contributions, but all withdrawals are tax-free after five years and after you reach age 59 1/2.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com