The Trump Administration has proposed sweeping changes to taxation in the United States. The broad outlines of the plan would represent one of the biggest tax cuts in American history if fully implemented.
Here are the highlights of Trump’s tax plan:
- Income tax brackets reduced from seven to three. Bottom rate of 10%, middle rate of 25%, and top rate of 35%.
- Cut corporate tax from 35% to 15%.
- Move to a “territorial” system, meaning income earned by businesses overseas would not be taxed by the US government.
- Repeal the 3.8% Obamacare taxes that hit businesses and investors.
- A “one-time tax” on money held by corporations overseas, to encourage the repatriation of those funds. The tax could apply to trillions of dollars.
- End the “Death tax.”
- Repeal the Alternative Minimum Tax (AMT).
- Eliminate tax deductions such as the mortgage interest and charitable contribution deductions.
The challenge will be getting the tax plan passed by the House of Representatives. Some Republicans have already expressed concerns over the large deficits projected as a result of the tax reductions, however, the Trump administration says the growth generated from the cuts will make up the budget gap.
Watch as White House Economic Advisor Gary Cohn explains the Trump tax plan:
If implemented, the plan would make the United States much more competitive economically, as a lower corporate rate, lower investment taxes, and lower personal taxes would generate increased growth. This would present a serious challenge to America’s economic competitors.