The two unavoidable things in life are death and taxes. Depending upon how you view things, there might at least be less of a tax burden under President Donald Trump’s newly proposed tax plan.
Some Americans will cheer the new plans. Others will criticize the plan. Regardless of which side of the aisle you are on, there are a lot of moving parts here and there are likely going to be many negotiations over what is proposed and what can be passed into law.
24/7 Wall St. has decided to hit on a few of the key points about the proposed Trump tax plan. It is important to consider that many of these items and topics might be changed or might be up for negotiation in the weeks and months ahead.
These points have been based upon comments out of White House chief economic advisor Gary Cohn and from Treasury Secretary Steven Mnuchin in a press briefing at the White House on Wednesday, April 26, 2017.
Here are ten key points about the new tax proposals, with limited color added for observation.
1) Corporate Tax Rates: The proposal comes with a 15% corporate tax rate at the Federal level, down from 35% as of now. Pass-through entity tax would also drop to 15% for owners.
2) The Inheritance Tax (Death Tax): To be repealed and phased out.
3) Alternative Minimum Tax & Obamacare Taxes: AMT and 3.8% Obamacare taxes would disappear.
4) Individual Tax Brackets & Rates: Drops to 3 brackets from 7 brackets; new brackets to be 35%, 25%, and 10% but cut-off levels remain unknown.
5) Standard Deductions: Doubling the standard deduction that Americans can claim; and families will not pay any income taxes on the first $24,000 in income.
6) Line-Item Deduction Changes: Individuals would get to keep mortgage interest and charitable contributions deductions; other deductions would be set to disappear – elimination of state and local tax deductions from federal taxes.
7) Repatriation: Rather than 35% for repatriation today, there would be an unspecified (estimated at 10% in prior communications) one-time tax on the trillions of dollars held overseas by U.S. corporations.
8) International Corporate Taxes: Moves to a “territorial tax” system rather than the current system.
9) Revenue/Deficit Impact: Unknown based upon revenue-neutral or deficit-neutral impact.
10) Border Adjustment Tax: The prior B.A.T. from the first House tax plan has not been killed but it has not been included, and Mnuchin had said earlier in the day that a border tax would not work in its current form earlier in the day.
Here are some of the top headlines about the initial tax proposals from major media outlets, with taglines attached if included:
- Wall Street Journal — Trump Tax Plan Sets Deep Changes for Individuals, Firms
- New York Times — Trump Proposes Sharply Cutting Tax Rates for Individuals
- Fox Business — Trump Proposes Sharply Cutting Tax Rates for Individuals
- Fox Business — Trump’s Tax Plan to Give Wealthy a Smaller-Than-Expected Break
- Reuters — Trump Takes Aim at Estate, Alternative Minimum Taxes
- Financial Times — Trump unveils cuts in corporate and individual taxes (Treasury secretary claims GOP support — but package deviates from Congressional plan)
- Bloomberg — White House Unveils Trump’s Opening Tax-Cut Bid
- CNN — ‘Biggest Tax Cut’ in US History (Trump team outlines tax proposal that leans heavily on tax cuts, but leaves many questions unanswered)
- The Washington Post — White House Unveils Dramatic Plan to Overhaul Tax Code in Major Test for Trump
- Time — Trump’s Big Tax Cut
Stay tuned. Many detailed preliminary studies for and against these proposals will be coming out in the coming days and weeks.