- New Tax Reform Proposal
- November 14, 2017 | Author: Lance J. Kinchen
- Law Firm: Breazeale, Sachse & Wilson, L.L.P. - Baton Rouge Office
In September, President Trump laid out his much awaited tax proposal for tax reform. The proposal has four guiding principles:
1. to make the tax code simpler and easier to understand;
2. to give American workers a pay raise by allowing them to keep more of their paychecks;
3. to make America the jobs magnet of the world by leveling the playing field for American businesses and workers; and
4. to bring back trillions of dollars that are currently kept offshore to reinvest in the American economy.
This proposal lays out the framework for some key provisions but the details are to follow. Some of the key provisions of the proposal are as follows:
1. Standard Deduction: Raise the standard deduction to $24,000 for married taxpayers filing jointly and $12,000 for single filers.
2. Tax Brackets: Reduce the existing seven tax brackets to three tax brackets of 12%, 25% and 35%. The proposal leaves room for Congress to add a fourth bracket to apply to the highest income taxpayers.
3. Individual Alternative Minimum Tax: Repeal the alternative minimum tax.
4. Itemized Deductions: Eliminate most itemized deductions but retain home mortgage interest and charitable contribution deductions.
5. Estate Taxes: Repeal the death tax and the generation-skipping transfer tax.
6. Corporate Incentives: Limit the maximum tax rate applied to the business income of small and family-owned businesses to 25%.
7. Corporate Tax Rate: Reduce the corporate tax rate to 20% and eliminate the corporate alternative minimum tax
8. Territorial Taxation: End the incentive to keep foreign profits offshore by exempting them when they are repatriated to the United States. It will create a 100% exemption for dividends from foreign subsidiaries (in which the U.S. parent owns at least a 10% stake)a