You'd never know this to listen to Trump's liberal and conservative critics, but Trump's tax plan contains some provisions that appeal to centrists and liberals but contains many other provisions that appeal to conservatives. I do not agree with some aspects of Trump's plan, but it would be substantial improvement over what we have now.
Predictably, purists from the left and right have attacked Trump's plan. Left-wing purists complain that it would unfairly benefit the rich, even though it would remove millions of average people from the tax roles and would reduce or end many loopholes and exemptions now enjoyed by the rich. Right-wing purists complain that Trump's plan would raise the deficit and increase the debt, even though all previous major tax cuts have been followed by substantial increases in federal revenue (right-wing purists are assuming that Trump would not get federal spending under control).
Here are the key points about Trump's tax plan, taken directly from his website:
The Trump Tax Plan Achieves These Goals
The Tax Policy Center:
Fidelity Tax Relief:
If you want to read Trump's entire tax reform plan, here it is (in web and PDF format):
Tax Reform
https://assets.donaldjtrump.com/trump-tax-reform.pdf
Here is what some others have said about Trump's tax plan:
Larry Kudlow: Larry Kudlow on Trump's Tax Plan: I Really Like It
Kudlow Trumpets Trump Tax Plan
Tax Foundation: http://taxfoundation.org/article/details-and-analysis-donald-trump-s-tax-plan
Tax Policy Center: http://taxpolicycenter.org/UploadedPDF/2000560-an-analysis-of-donald-trumps-tax-plan.pdf
Fidelity Tax Relief: Will Donald Trump's Tax Plan Help the Average Person?
Predictably, purists from the left and right have attacked Trump's plan. Left-wing purists complain that it would unfairly benefit the rich, even though it would remove millions of average people from the tax roles and would reduce or end many loopholes and exemptions now enjoyed by the rich. Right-wing purists complain that Trump's plan would raise the deficit and increase the debt, even though all previous major tax cuts have been followed by substantial increases in federal revenue (right-wing purists are assuming that Trump would not get federal spending under control).
Here are the key points about Trump's tax plan, taken directly from his website:
The Trump Tax Plan Achieves These Goals
- If you are single and earn less than $25,000, or married and jointly earn less than $50,000, you will not owe any income tax. That removes nearly 75 million households – over 50% – from the income tax rolls. They get a new one page form to send the IRS saying, “I win,” those who would otherwise owe income taxes will save an average of nearly $1,000 each.
- All other Americans will get a simpler tax code with four brackets – 0%, 10%, 20% and 25% – instead of the current seven. This new tax code eliminates the marriage penalty and the Alternative Minimum Tax (AMT) while providing the lowest tax rate since before World War II.
- No business of any size, from a Fortune 500 to a mom and pop shop to a freelancer living job to job, will pay more than 15% of their business income in taxes. This lower rate makes corporate inversions unnecessary by making America’s tax rate one of the best in the world.
- No family will have to pay the death tax. You earned and saved that money for your family, not the government. You paid taxes on it when you earned it.
- Reducing or eliminating deductions and loopholes available to the very rich, starting by steepening the curve of the Personal Exemption Phaseout and the Pease Limitation on itemized deductions. The Trump plan also phases out the tax exemption on life insurance interest for high-income earners, ends the current tax treatment of carried interest for speculative partnerships that do not grow businesses or create jobs and are not risking their own capital, and reduces or eliminates other loopholes for the very rich and special interests. These reductions and eliminations will not harm the economy or hurt the middle class. Because the Trump plan introduces a new business income rate within the personal income tax code, they will not harm small businesses either.
- A one-time deemed repatriation of corporate cash held overseas at a significantly discounted 10% tax rate. Since we are making America’s corporate tax rate globally competitive, it is only fair that corporations help make that move fiscally responsible. U.S.-owned corporations have as much as $2.5 trillion in cash sitting overseas. Some companies have been leaving cash overseas as a tax maneuver. Under this plan, they can bring their cash home and put it to work in America while benefitting from the newly-lowered corporate tax rate that is globally competitive and no longer requires parking cash overseas. Other companies have cash overseas for specific business units or activities. They can leave that cash overseas, but they will still have to pay the one-time repatriation fee.
- An end to the deferral of taxes on corporate income earned abroad. Corporations will no longer be allowed to defer taxes on income earned abroad, but the foreign tax credit will remain in place because no company should face double taxation.
- Reducing or eliminating some corporate loopholes that cater to special interests, as well as deductions made unnecessary or redundant by the new lower tax rate on corporations and business income. We will also phase in a reasonable cap on the deductibility of business interest expenses.
According to our Taxes and Growth Model, the increased incentives to work and invest from this tax plan would increase the size of the economy by 11 percent over the long run. The plan would lead to 6.5 percent higher wages and a 29 percent larger capital stock. The larger economy is mainly the result of the significant reduction in the service price of capital due to the rate reductions for corporations and pass through businesses. In addition, the reduction of marginal tax rates on individual income would increase incentives to work and result in 5.3 million full-time equivalent jobs. (Link given below)
The Tax Policy Center:
On balance, the plan would significantly increase the number of households that would pay no income tax (or would receive an income tax refund). In 2017, an estimated 110 million households would pay no income tax under the plan, compared with 77 million under current law. That would boost the percentage of households paying no income tax from 44 percent to 63 percent. (Link given below)
Fidelity Tax Relief:
Basically, in Trump’s plan, those who make less than $25,000 per year do not have to pay any taxes, while the wealthy will end up paying more money in taxes. His plan would save millions from having to pay taxes, and the middle class will save on average almost $1,000 every year. (Link given below)
If you want to read Trump's entire tax reform plan, here it is (in web and PDF format):
Tax Reform
https://assets.donaldjtrump.com/trump-tax-reform.pdf
Here is what some others have said about Trump's tax plan:
Larry Kudlow: Larry Kudlow on Trump's Tax Plan: I Really Like It
Kudlow Trumpets Trump Tax Plan
Tax Foundation: http://taxfoundation.org/article/details-and-analysis-donald-trump-s-tax-plan
Tax Policy Center: http://taxpolicycenter.org/UploadedPDF/2000560-an-analysis-of-donald-trumps-tax-plan.pdf
Fidelity Tax Relief: Will Donald Trump's Tax Plan Help the Average Person?
