Saturday, April 29, 2017

White House Proposal

White House proposal
(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.
Business Tax Reform
  • 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).
Source: NAEA E@lert Newsletter April 28, 2017

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