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Trump's Tax Plan Released Today - Referred To As "Largest Tax Reform Package Since 1986"

White House Economic Advisor Gary Cohn and Treasury Secretary Steve Mnuchin laid out the framework for President Trump’s tax reform plan, which they referred to as the largest tax reform package since 1986.  Here are the highlights:

 

  • Reduce U.S. corporate tax rate to 15% from 35%;

  • One-time repatriation of overseas cash by corporations at a “competitive” (yet undisclosed) rate;

  • Personal tax brackets go from 7 to 3 (10%, 25%, 35%);

  • Cap gains rate is 20%, but the Obamacare tax of 3.8% is eliminated;

  • Eliminates personal deductions, except for charitable contributions and home mortgage deductions.  This would impact high tax states, as it would eliminate the tax deduction on state and local taxes;

  • NO border adjustment tax included; and,

  • Eliminates the estate tax.

 

It is just a framework and is devoid of many of the details that will need to be negotiated over the coming months.  Some experts have estimated that the loss in revenue could increase the deficit by $2T-$7T (big variance) over the next 10 years.  But much of this could be offset by the tax on repatriated funds and the loss of local/state tax deduction.  The GOP also believes that using dynamic scoring (means lower taxes would stimulate economic growth and that is included in forecasting) will offset revenue loss.

 

There is a tough road ahead from bare-bone proposal to ultimate law, so let the negotiations begin.  Not much detail at this point, but at least it gets the ball rolling.

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