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President Donald Trump announced a tax plan that proposes reductions to individual and corporate income tax rates but also eliminates several tax breaks. According to a fact sheet provided by the White House:
- Trump’s plan will cut the number of income tax brackets from seven to three, with a top rate of 35 percent and lower rates of 25 percent and 10 percent. It is not clear what income ranges will fall under those brackets. It would also double the standard deduction.
- The proposal will chop the corporate tax rate to 15 percent from 35 percent.
- It would eliminate tax deductions with only a few exceptions, including the mortgage interest and charitable contribution deductions.
- The White House said there will be a “one-time tax” on the trillions of dollars held by corporations overseas. However, Treasury Secretary Steven Mnuchin said the rate for that tax has yet to be determined. Mnuchin said the White House is “working with the House and Senate” on a repatriation rate, saying it would be “very competitive.”
- The plan would get rid of the estate tax, otherwise known as the “death tax.” Economic advisor Gary Cohn said that the move will help privately held businesses and American farmers. Analysis of the estate tax reveals that it affects only a very small portion of Americans.
- Mnuchin also said the U.S. would go to a “territorial” tax system. Though further details were not forthcoming, such systems typically exclude most or all of the income that businesses earn overseas.
- Trump’s plan would also repeal the alternative minimum tax and 3.8 percent Obamacare taxes.
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