Given that all attempts at repealing Obamacare have been an epic fail thus far, tax reform has been the main focus of the Trump administration’s recent agenda.
During his presidential campaign, he outlined a plan for tax cuts tabled below:
He also had the following proposals:
>Eliminate of the Net Investment Income Tax.
>Increase the standard deduction from $6,300 to $15,000 for singles and from $12,600 to $30,000 for married couples filing jointly.
>Eliminate of the personal exemption and introduces other childcare-related tax provisions.
>Make childcare costs deductible from adjusted gross income for most Americans (above-the-line), up to the average cost of care in their state. The deduction would be phased out for individuals earning more than $250,000 or couples earning more than $500,000.
>Offer credits (“spending rebates”) of up to $1,200 a year for childcare expenses to lower-income families, through the earned income tax credit.
>Create new saving accounts for care for children or elderly parents, or school tuitions, and offers a 50 percent match of contributions (not modeled).
>Caps itemized deductions at $100,000 for single filers and $200,000 for married couples filing jointly.
>Taxes carried interest as ordinary income.
>Eliminates the individual alternative minimum tax.
Among the most significant — in scope and implication — was a reduction in the corporate tax rate from the current rate of 35 percent (extremely high by international standards) to 15 percent. Given that our high corporate tax rate has incentivized many corporations to keep cash overseas, Trump also wants to give them the ability to repatriate those funds tax-free.
Speaking today, Trump promised “We will cut taxes tremendously for the middle class — not just a little bit, but tremendously.”
Meanwhile, the chair of the House Freedom Caucus said he would not support a tax reform plan with a corporate tax rate above 20 percent or a small business rate above 25 percent. Another Freedom Caucus member, Rep. Dave Brat, said many are willing to allow $2 trillion in tax cuts, and later appeared on Fox News to tell Neil Cavuto that Americans are going to be happy with Trump’s tax plan.