President Donald Trump’s “Biggest Individual and Business Tax Cut in American History” looks a lot like old economic plan from the election campaign, in which he had promised major cuts to corporate and individual tax rates.

In his announcement earlier today, Secretary Steven Mnuchin along with White House chief economic adviser Gary Cohn, unveiled the plan for Trump’s tax reform. This plan will be used as a guide to develop a tax reform bill within the next couple months. The President would like to see the bill passed this fall.   The following is a brief overview of the plan:

President Trump’s Tax Reform Plan

Trump Tax Goals

President Trump believes his new tax policies are designed to grow the economy and create jobs, provide relief to middle-income families and lower the business tax rates. He also promises to simplify the tax code.

 

Tax Relief Measures for Individuals

With the reform would come relief for American families, the middle-income families in particular. This would be achieved by:

  • Reducing the tax brackets from 7 brackets to 3 brackets – 10%, 25% and 35%
  • Doubling the standard deduction
  • Offering tax breaks for child and dependent care expenses.
  • Repealing the 3.8% Net Investment tax.
  • Eliminating tax breaks that target the wealthy
  • Repealing the Alternative Minimum Tax
  • Eliminating the death tax

Trump Business Tax Reforms

Currently, the United States has one of the highest corporate tax rates in the world. Trump’s tax reform would lower the business tax rates to one of the lowest in the world. His business tax proposal would see the 35% lowered to a 15% business tax rate. In addition, to provide companies with an one-time incentive to bring overseas money back into the U.S., Trump has proposed some sort of favorable repatriation tax.

One missing element was the border tax that would put a tariff on imports. Cohn and Mnuchin said that this plan was unworkable at the moment but that they were looking at other ways to structure this idea.

Trump has asked his administration to hold listening sessions to come up with a plan that will pass both levels of government. The Trump Administration will continue to develop the details throughout the month of May.

Many economists are skeptical that this plan can get approved because the plan does not include any proposals for raising new revenue, although, Mr. Mnuchins claims that the economic growth that will result would create enough new tax revenue to cover the cuts. The goal is to make permanent changes to the Tax Code, however, without the support of the Democrats, Trump and his fellow Republicans would only be able to pass cuts that would last for 10 years.

Read: Planning for Trump to learn more about suggested tax measures if these tax reforms were to be implemented

AG TAX LLP CAN HELP

If you have any tax-related queries, need assistance with tax planning or filing your tax returns please contact us. Our team comprises of highly experienced tax professionals with extensive knowledge of US and Canadian tax laws as well as cross-border compliance.

Furthermore, as a full service accounting firm, AG Tax assures complete assistance with even your most complex tax needs.

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  • Canadian Personal and corporate tax returns
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