Here’s a look at President Trump’s proposed tax plan from earlier today.
Here are the key points of the plan as it was released:
- Corporate tax rate of 15%: Such a rate would deliver on Trump’s campaign promise. The current federal statutory rate is 35%.
- Allows pass-through rate for business owners: Instead of self-owned businesses being taxed at the personal income rate, business owners would have incomes from operations taxed at the 15% rate. So if you own your own business, income from that business would be taxed at the corporate rate. According to The New York Times, that could apply to the Trump Organization.
- No border-adjustment tax: The tax on imports was favored by House GOP leaders such as Speaker Paul Ryan and Kevin Brady, the chair of the Ways and Means Committee. Mnuchin said the White House talked to Ryan and Brady but thought the tax did not “work in its current form.”
- A slight adjustment to individual tax rates: White House officials said there would be three tax brackets with rates of 35%, 25%, and 10%, down from the current seven brackets. Cohn told reporters that he did not have the exact incomes associated with the brackets.
- Doubling of the standard individual tax deduction: This would allow individual filers to deduct their first $12,700 in income from their taxes and $25,400 for joint filers, as opposed to the current $6,350 for individuals and $12,700 for joint filers.
- A one-time repatriation tax: This would allow companies to bring back money from overseas to the US with a slightly lower, one-time tax. The White House did not clarify the rate at which this money would be taxed. President George Bush enacted a repatriation tax at a 5.25% rate in 2004, but studies show the money brought back mostly went to stock buybacks and dividends rather than hiring workers.
- Elimination of the estate tax: This would eliminate a tax on assets being transferred through a will.
- Elimination of itemized tax deductions other than charitable donations and mortgage payments: Mnuchin said this provision would close “loopholes” and offset the decrease in base tax rate for high income Americans.
- Repeal a 3.8% tax on net investment income: The tax was levied on “individuals, estates and trusts” with higher than a certain threshold in investment income. For instance, the threshold for an individual was $200,000 in investment income last year.
- Repeal the alternative minimum tax: This tax requires some people who have large numbers of deductions to calculate their income tax under the normal tax rate and the alternative and pay the higher amount. According to the Tax Policy Center, the tax was originally designed to eliminate large deductions by wealthier people, but now applies to about 5 million people.