Trump Administration Outlines New Tax Proposal
Here’s what we know so far about the president’s tax proposal.
Lower Individual Income Tax Rates
Re- ducing the number of tax brackets from seven to three for individuals, which would be set at 10%, 25% and 33%. Today’s rates are 10%, 15%, 25%, 28%, 33%, 35% and 39.6%.
Much Lower Business Rates
Slash the top tax rate for all businesses to 15%. A drop to 15% would also be a huge drop from the 39.6% top rate paid by owners and shareholders of so-called pass-through businesses.
One-Time Tax on Overseas Profits
The president will call for a low, one-time tax on the $2.6 trillion of profits that were earned overseas by U.S. multinational corporations and were technically never brought back to the United States.
Switch to a Territorial Tax System
Today, U.S. companies must pay tax on all their profits, regardless of where in the world those profits are earned. Switch to a territorial system for businesses. That would mean U.S. companies would only owe U.S. tax on what they earn in the United States.
No Border Adjustment Tax as Proposed
Border adjustment tax would fundamentally alter how imports and exports are taxed. Under the House plan, companies could no longer deduct the cost of their imported goods, and sales of their exports would no longer be subject to U.S. tax.
Such a provision could raise more than $1 trillion over a decade, which the House GOP was counting on to help offset the cost of their proposed rate cuts.
Tax Break for Child Care Costs
Outline calls for tax relief for child care costs, but doesn’t provide much detail. The other would give a tax break to anyone who sets aside up to $2,000 a year
to cover costs associated with child care and elder care.
The contributions would be tax deductible, then grow tax free.
Eliminate Most Deductions
Elimination of all deductions except those for mortgage interest and charitable contributions.
Repeal a String of Taxes
Repeal of the Alternative Minimum Tax, the estate tax and the 3.8% Medicare surtax that applies to wages and investments above a certain level.