President Donald Trump said the "rebirth of American industry is beginning" as he pushed his tax plan to the National Association of Manufacturers Friday. Reducing the corporate tax rate from 35 to 20 percent costs about $2 trillion over 10 years, while capping the rate on "pass-through" companies - like those in the Trump Organization - to 25 percent (down from 39.6 percent today) costs about $770 billion. Those are important details, which will be sorted out by Congress.
Congressional Republicans describe the change as creating a larger "zero tax bracket". Our commitment to those affected is this: We are with you, we will stay with you, and we will come back stronger than ever.
The TPC analysis says the average household in the top quintile would see its tax bill decline by $8,470 in 2018 under the plan - a drop of 2.4 percentage points from the average federal tax rate.
Overall, the plan increases individual income taxes by $470 billion; cuts business taxes by $2.6 trillion; and cuts the estate tax by $240 billion.
"The top 0.1 percent would get an average boost in after-tax income of $720,000 or 10.2 percent of their after-tax income".
The report says the average tax bill for all income groups would go down in 2018 if the framework were implemented - but what's eye-popping is how much the highest-earning Americans would save.
In the address, Trump also reviewed policy changes since he took office in January that he said are meant to improve the business climate, including lifting restrictions on energy production, reversing environmental rules and rolling back regulations.
White House officials have given conflicting accounts of the impact of the tax cuts on the wealthy.
While U.S. statutory tax rates are higher, the effective tax rate paid by corporations is in fact roughly equivalent to the effective tax rates of our peer countries, due to loopholes in the U.S. tax code. "Everyday Americans and future generations lose under the Trump tax plan, while the wealthy keep winning". Under current law, the money is taxed if it is brought back to the U.S. Married couples get at least $20,800: $12,700 for the standard deduction and two personal exemptions of $4,050 each.
This provision would allow middle-class families to shield more of their income from taxation.
For individual taxpayers, the plan would collapse the tax brackets to three from seven, lowering rates for many while doubling the standard deduction and increasing the child tax credit.
The same can not be said of the planned abolition of the estate (inheritance) tax, which would benefit only those with assets worth $5.5m or more. Or it would be forced to run the national debt up to unsafe levels, likely driving up borrowing rates for consumers and businesses. That added growth would, they say, generate revenue to cover the remainder of the cost of the tax cut. Of course, this would not affect municipal bonds because the tax exemption for municipal bonds is not an itemized deduction (this was a test for our readers). About 30 percent of USA taxpayers itemize their deductions. In either case, with a greatly expanded standard deduction and far fewer itemized deductions, it seems likely that almost everyone would be better off taking standard deductions under the proposed system.
The GOP framework calls for retaining the deductions for mortgage interest and charitable contributions, which "help accomplish important goals that strengthen civil society. homeownership and charitable giving".