(President President Trump Releases a One Page Plan):
Individual Tax Reform
- Reduce seven (7) tax brackets into three (3) tax brackets.
- The current marginal rates are 10%, 15%, 25%, 28%, 33%, 35%, and 39.6%.
- Three new proposed rates of 10%, 25%, and 35%.
- The administration has yet to identify the tax bracket income levels for these new rates?
- Repeal the Affordable Care Act's (ACA) 3.8% net investment income tax imposed upon unearned income and capital gains of high-income taxpayers.
- Double the standard deduction.
- Limit itemized deductions to mortgage interest and charitable contributions.
- Repeal the estate tax.
- Repeal the Alternative Minimum Tax (AMT).
- Provide tax relief for families with child and dependent care expenses.
- The administration has yet to clarify how this relief will differ from the current expenses under IRC §21.
- Lower the business tax rate to 15%. While the current corporate tax rate is 35%, many small businesses (S-Corp's P-Ships) pass through their income via K-1's to the individual level.
- The administration has yet to identify any rules which may be established to prevent individuals from creating pass-through entities to avoid being taxed at a lower business rate, rather than higher individual rate? But there would be rules established to prevent this practice from taking place?
- Establish a territorial tax system.
- Foreign earned income would generally be excluded from this system.
- Eliminate tax breaks for special interests.
- Establish a "one-time tax" on corporate earnings realized and held overseas (on which tax is deferred).