Trump Said to Target Carried Interest and Corporate Tax Breaks

He called the new tax code the “most significant tax legislation since 1986, and one of the biggest tax cuts in American history”. This should encourage more investment in business capital – machines, buildings, and other assets that ultimately will require workers to put them into use. President Trump’s advisors offered few details about the plan, insisting the announcement was just a “broad-brush overview”.

These included a one-off tax deal to bring home $2.6trn (€2.4trn) in profits parked offshore by corporations.

For individuals and families, the plan reduces the number of tax brackets (the highest of which is now 39.6 percent) from seven to three, at 10 percent, 25 percent, and 35 percent.

“I’m glad the president showed the courage to release his tax proposal. All those moneys will be squeezed even more from a plan like this that again cuts revenues by cutting taxes for people at the top”.

Even without the specifics from Trump’s returns, it’s reasonable to assume that however much tax he pays at the top rate on his business income would fall by almost two-thirds. In 2005, Trump himself paid $36.5 million in taxes, mostly because of the AMT.

As expected, Trump’s plan reduces the top corporate income tax rate from 35 percent to 15 percent. The wealthiest Americans would fall into the lower tax bracket. But we don’t know the income levels for those brackets, so we have no idea how that would affect individual taxpayers. To pay for the cuts, the administration would eliminate all tax deductions, except the mortgage, charitable giving, and retirement savings deductions.

“Certainly losing deductibility of state and local taxes would hurt states like New Jersey and NY that have high taxes”, Christie told reporters Thursday after a speech to the Commerce and Industry Association of New Jersey.

Overall it’s not even likely that this plan will pass, but if the proposed changes confuse you, here’s a simplified breakdown of who will benefit most from the changes.

So far, Trump’s tax overhaul, unveiled Wednesday, is flimsy and certainly incomplete.

Mnuchin said Trump will propose safeguards to prevent rich people from taking advantage of this tax cut, but provided no details on how that would work.

Mnuchin also confirmed that the infrastructure spending will not be included in the tax plan. Most everyone fears it, but it’s already been so watered down as to apply only to estates worth at least $5.5 million.