President Trump’s Income Tax Reform Plan

Here are the main points of the Income Tax Reform Plan proposed by President Trump today:

  1. Trump's Tax PlanThe United States’ tax code is broken and needs to be fixed
  2. It is time:
    1. To provide a level playing field for American workers
    2. To bring American companies back home
    3. To attract new businesses to the United States
    4. To put money in the pockets of hardworking Americans
  3. The four principles of tax reform:
    1. To make the tax code simple, fair and easy to understand
    2. To reduce the tax burden on American workers
    3. To make America the jobs magnet of the world by leveling the playing field
    4. To bring back trillions of dollars held offshore to be invested into the American economy

 

  1. To extend economic opportunities to American workers, small businesses and middle-income families

 

  1. The Income Tax Reform Plan includes:
    1. Tax relief for middle-class familiesTax Reform
    2. “Postcard” tax filing for most Americans
    3. Tax relief for small businesses
    4. The end of incentives to ship jobs overseas
    5. Broaden the tax base by closing tax breaks and loopholes

 

  1. The object is:
    1. To strengthen and grow the middle class
    2. To keep more money in the pockets of the middle-class by reducing the tax burden
    3. To create a healthier economy
    4. To give American families confidence
    5. To create an income tax system that is simple and fair
    6. To make America’s tax code work for the middle-class
    7. To NOT shift the burden from the high-income to middle-income taxpayers

 

  1. Some specific proposed changes for Individuals:
    1. The standard deduction will be doubled from $12,000 to $24,000
    2. Tax rates will be reduced from the current seven tax brackets to just three tax brackets of 12%, 25% and 35%
    3. Tax brackets and other tax parameters will be indexed to reflect inflation
    4. The personal exemption for dependents will be repealed
    5. The Child Tax Credit will be significantly increased
    6. The Child Tax Credit will phase out at higher levels of income than at present
    7. There will be a new non-refundable credit of $500 for non-child dependents
    8. The Alternative Minimum Tax (AMT) will be repealed
    9. Most itemized deductions will be eliminated
    10. Tax incentives for home mortgage interest and charitable deductions will be retained
    11. Tax benefits that encourage work, higher education and retirement security will be retained but revised
    12. More workers will be encouraged to participate in retirement programs
    13. Many other exemptions, deductions and credits will be eliminated to simplify the tax code and make it fairer
    14. The death tax will be repealed
    15. The generation-skipping transfer tax will be repealed

 

  1. Some specific proposed changes for Small Businesses:
    1. The tax rate for small businesses will be reduced to 25%
    2. The corporate tax rate will be reduced to 20%
    3. The corporate Alternative Minimum Tax (AMT) will be eliminated
    4. Businesses will be allowed to expense new assets for at least the next five years
    5. The deduction for interest expense by C-Corporations will be partially limited
    6. The domestic production deduction will be eliminated
    7. Many other special exclusions and deductions will be repealed
    8. Credits for Research and Development (R&D) will be preserved
    9. Credits for low-income housing will be preserved
    10. Special tax rules for specific industries and sectors will be amended to provide less opportunity for tax avoidance
    11. There will be a 100% exemption for dividends from foreign subsidiaries paid to American companies in the United States
    12. Tax rates for American companies will be reduced and applied to domestic and foreign earnings
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