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April 26, 2017
2017-9005

Trump tax plan calls for 15% business rate, territorial tax system

The Trump administration today (April 26, 2017) outlined a tax reform plan, described in the attached White House fact sheet, that calls for a 15% business tax rate and a one-time tax on the repatriation of foreign earnings of US companies at an unspecified rate. Treasury Secretary Steven Mnuchin said the tax rate on repatriation would be negotiated with Congress, along with other details.

The Administration for the first time called for a switch to a territorial system of taxing foreign earnings. Trump had called for a worldwide system and elimination of deferral in 2015, during the campaign, but had not addressed his preference on the issue for some time. Today's plan, as outlined by Secretary Mnuchin and National Economic Council Director Gary Cohn during a press briefing, does not address the House border adjustability proposal.

For individuals, income tax rates would be set at 10%, 25%, and 35%; these differ from Trump's campaign proposal rates of 12%, 25%, and 33%, which were aligned with those in the House Blueprint on tax reform. The plan calls for the repeal of all deductions for individuals aside from the mortgage interest and charitable contribution deductions, and also calls for repeal of the Alternative Minimum Tax (AMT) and the estate tax. "We are going to eliminate, on the personal side, all tax deductions other than mortgage interest and charitable deductions. We think that will be sweeping reform," Secretary Mnuchin said. The plan calls for doubling the standard deduction.

The top capital gains and dividends rate would remain at 20% and the 3.8% net investment income tax, enacted under the Affordable Care Act, would be repealed.

"Throughout the month of May, the Trump Administration will hold listening sessions with stakeholders to receive their input and will continue working with the House and Senate to develop the details of a plan that provides massive tax relief, creates jobs, and makes America more competitive — and can pass both chambers," the Administration said in a document released during the briefing.

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ATTACHMENT

White House fact sheet

 

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