News and updates

The Trump Administration released its initial tax proposal. There are still lots of questions and items to be negotiated. The rollout came via a press conference held by Treasury Secretary Mnuchin and National Economic Council Director Gary Cohn. The highlights are below.

Personal Tax Reform

• For individuals, income tax rates would be set at 10%, 25%, and 35%; these are different than Trump’s campaign proposal rates of 12%, 25%, and 33%, which were aligned with those in the House Blueprint on tax reform.
• The plan calls to double the standard deduction, but repeals all itemized deductions for individuals aside from the mortgage interest and charitable contribution deductions (includes eliminating deduction for state and local taxes).
• The plan calls for repeal of the Alternative Minimum Tax (AMT) and the estate tax immediately with no phase out.
• The top capital gains and dividends rate would remain at 20%.
• The 3.8% net investment income tax, enacted under the Affordable Care Act, would be repealed.
•   It would provide tax relief for child and dependent care costs.

Business Tax Reform:

• It calls for a 15% business tax rate (which has been very covered in the news).
• There is a one-time tax on the repatriation of foreign earnings of US companies at an unspecified rate, which Treasury Secretary Steven Mnuchin said would be negotiated with Congress along with other details.
• For the first time, the Administration called for a switch to a territorial system of taxing foreign earnings. Note, Trump had called for a worldwide system and elimination of deferral in 2015, during the campaign, but had not addressed his preference on the issue for some time. Today’s plan, as outlined by Secretary Mnuchin and during the press briefing, does not address the House border adjustability proposal.
• Eliminate “tax breaks for special interests”