Looking at Trump’s first 100 hours, tax policy changes are inevitable. Here is a brief overview of The Trump Plan.
Trump is planning to substantially reduce the corporate tax rate from 35% to 15%, and repeal the alternative minimum tax. One of the reasons he gives for lowering the corporate tax rate is to be more in line with the taxes in other countries in order to discourage businesses from moving their operations there. President Trump wants to, across the board, reduce the amount of regulatory burden on employers, especially smaller employers. His goal, according to Rhonda Brooks of AGPro, is to “stimulate an increase in corporate reinvestment and trigger growth and expansion within the U.S.”
Trump’s plan for individual taxes is to reduce the number of income brackets from seven to just three brackets. He is also proposing the elimination of the alternative minimum tax, and the elimination of the 3.8% Medicare tax.
Brackets & Rates for Married-Joint filers:
Less than $75,000: 12%
More than $75,000 but less than $225,000: 25%
More than $225,000: 33%
*Brackets for single filers are ½ of these amounts
Standard deductions, under Trumps’ plan, will be increased. The new rate that he proposes is a standard deduction of $15,000 for a single filing and a standard deduction of $30,000 for a joint filing. There will no longer be any personal exemptions, or a head-of-household filing status. Under the Trump Plan, itemized deductions for single filers will cap at $100,000 and at $200,000 for joint filers.
The Trump team believes that the average family will benefit from the tax changes as well as receiving higher wages and greater incomes because of increased hiring and greater business investments. According to The Tax Foundation, “The Trump plan would raise U.S. wages by about 6%. So, for workers earning $50,000 a year, that would be a substantial $3,000 annual wage boost.”
In Donald Trump’s vision, the working and middle class Americans will be receiving a massive tax reduction and the rich will pay their fair share. Special interest loopholes will be eliminated, and our corporate tax rate will be more competitive with those of foreign countries.
The cost of childcare will be reduced by allowing families to deduct the full amount of the average cost of childcare. This would include stay-at-home parents or grandparents, but the limit is for 4 children per tax payer. The Trump Plan would also include a spending rebate for childcare expenses, but it is subject to a cap of half the payroll taxes paid by the lower earning parent taxpayer.
The death tax will be repealed. But, capital gains valued over $10 million will be taxed.
This is a very brief overview of the Trump Plan which hopefully can give you a glimpse of what will be. For any questions and for ways in which I can help you, Call 216-831-0042 to speak Mario Fazio at Meyers Roman Friedberg & Lewis.