by Brandon VerVelde
It’s an outline, not a detailed plan.
House and Senate leaders, along with the chairs of the tax-writing committees in both chambers, put out a joint statement calling the plan’s specifics “critical guideposts” as they begin the effort to write the legislation. Trump has repeatedly called himself a dealmaker, so lawmakers are likely considering this to be just his opening negotiating position. There’s lots of room for changes.
This is a bold plan.
The plan as laid out, even though sparse on the fine details, could be the boldest tax reform plan ever put out by a president.
Personal income tax rates are slashed from seven brackets down to just three: 10 percent, 25 percent and 35 percent. It repeals every deduction except home ownership and charitable contributions.
Perhaps the biggest and boldest of the plan is the slashing of business tax rates down to 15 percent from the current 35 percent. The new, lower rate would also apply to pass-through business income (S corporations), which is a massive shift from current law.
The death tax would be killed.
The plan calls for an unequivocal killing of the death tax. Technically known as the estate tax, which applies a 40 percent levy on inheritances more than $5.5 million or $11 million for married couples. This would allow family wealth and businesses built up over a lifetime to be passed on to the next generation.
Simplifying the tax code is a good thing.
According to the nonpartisan Tax Foundation, businesses spend upwards of $4.4 billion per year on tax compliance. That’s money that can’t be used to increase wages, hire new employees or expand the business. Eliminating deductions and special interest loopholes that have built up in the tax code since the last reform in the 1980s is a lofty goal and would be good for business (except accounting firms).
The Trump Administration wants more input.
The last item on the plan is their intention to seek out input on their proposals and any other tax reform ideas from businesses large and small.
Do you have thoughts on the president’s tax plan?
Send them to the White House by clicking here.
Brandon VerVelde is AAHOA’s director of Government Affairs Communication. Reach him at [email protected].