Trump's Tax Plan

President Trump and several prominent members of Congress provided a framework of their tax reform plan earlier this week. The plan is intended to reduce the tax burden for most taxpayers, including individuals and corporations. There are a lot of details to be worked out, but below is a quick summary of their proposals.

• Currently, there are seven different tax brackets, which will be reduced to three: 12%, 25% and 35%.
• The standard deduction will be increased to $12,000 for individuals and $24,000 for married couples filing jointly.
• Most itemized deductions will be eliminated, except for charitable contributions and mortgage interest. The deduction for state income taxes will be eliminated, which could be significant for taxpayers living in states with high income taxes (e.g., California and New York).
• The top corporate rate will be 20%; down from 35%.
• Business income from pass through entities (S Corporations, LLCs and partnerships) will be taxed at a maximum 25% rate.
• The Alternative Minimum Tax (AMT) will be repealed.
• Asset purchases (except for buildings) will be fully expensed in the year of purchase, at least for the next five years.
• All business tax credits, except for the research and low-income tax credits, will be repealed.
• Multinational corporations will be able to repatriate income from their foreign subsidiaries tax-free.
• The estate tax is repealed.

The goal is to reduce the tax burden and simplify compliance. You may read some of the prior articles below on Tax Reform Principles that should be encompassed in a good tax reform plan. Time will tell if this plan will promote economic activity, is fair to all taxpayers and is simple to comply with. As with most tax legislation... the "devil is in the details," and we'll keep you updated as more details become available.

What do you think about this framework? Do you like it or think it's a bad idea?