White House Proposes Slashing Individual and Business Tax Rates
The White House released a proposal on Wednesday for what they called the "biggest tax cut" in U.S. history -- with cuts that would benefit businesses, the middle class, and certain high-earning individuals -- but left unanswered questions about whether the plan would be paid for, or how.
Under the proposal, the federal income tax rate would be cut to 15% for corporations, small businesses, and partnerships of all sizes. It also imposes a one-time tax on about $2.6 trillion in earnings that U.S. companies have parked overseas. The plan would end the taxation of corporations' offshore income by moving to a territorial system, in which most foreign profits would be exempt from U.S. taxes. Currently, the U.S. taxes business income no matter where it's earned.
On the individual side, the tax overhaul calls for cutting the number of tax brackets to just three; 10%, 25& and 35%. The measure also called for nearly doubling the standard deduction from $12,600 to $24,000 for married couples, filing jointly. It would also expand tax deductions for the child and dependent care expenses, as well as protect the charitable gift and mortgage interest tax deductions.
It would also end a 3.8% net investment income tax that applies only to individuals who earn more than $200,000 a year, repeal the Alternative Minimum Tax, and eliminate the estate tax, which currently applies only to estates worth more than $5.49 million for individuals and $10.98 million for couples.
The White House proposal mirrors parts of the tax plan Trump proposed during the campaign, which would cost the government $6.2 trillion in the first decade, and more than $20 trillion by 2036 after accounting for interest costs and macroeconomic factors, according to an independent analysis.
By Patrick Cooney, The Federal Group, Inc.
Legislative Representative, Dental Trade Alliance