Demian Brady of the National Taxpayers Union identifies guiding principles associated with the president’s tax plan.
Based on the President’s proposal, five principles for tax reform seem to be guiding the administration.
1.Simplify Individual Tax Brackets and Increase the Standard Deduction: Trump’s plan would consolidate the existing seven tax brackets into three tax brackets of 10%, 25%, and 35%. This would lower the top personal income tax rate by 4.6%, from 39.6% to 35%. In order to further target savings to lower- and middle-income households, the plan also calls for doubling the standard deduction which would mean that a joint- filer couple would pay a 0% tax rate on the first $24,000 of their income, and would not have keep track of as many receipts for tax filing purposes. …
… 2.Eliminate Deductions: On the individual tax side, the Trump plan proposes to eliminate all deductions except the mortgage deduction and charitable donation deduction. Additionally, the plan calls for the closing of tax breaks that disproportionately benefit the wealthiest taxpayers. …
… 3.Repeal Taxes that Hinder Economic Growth: The repeal of the Estate Tax, the Alternative Minimum Tax, and the 3.8% Obamacare investment income tax are also at the forefront of Trump’s tax plan. …
… 4.Reduce the Corporate and Small Business Tax Rate and Move to Territorial System: Trump’s plan would cut the current corporate tax rate from 35% — the highest in the developed world — to 15%. This reduction would mean the United States would have a lower tax rate than other OECD countries, like France, Mexico, Spain, Italy, United Kingdom, Norway, and others. The only OECD countries with the same or lower tax rates would be Poland (15%), Latvia (15%), Canada (15%), Ireland (12.5%), Hungary (9%), and Switzerland (8.5%). According to Mnuchin, small- and medium-sized businesses would also be eligible for the 15% rate. This would make the United States more competitive in the increasingly globalized economy and free up investment capital for businesses. …
… 5.Repatriation: Trump’s plan would also include a one-time tax on the repatriation on wealth that is currently being held overseas by businesses and individuals because of our current tax law. Although the plan does not provide a specific rate, leaving that rate to be determined by Congress, Cohn ensured the American people that it would be a “competitive” rate.