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Trump’s tax plan: cut rates, remove loopholes, end corporate inversion

Donald Trump -- Prezography 4By Bob Eschliman
Editor

 

In the most detailed policy released yet by Republican presidential candidate Donald Trump, he says he wants to cut taxes for almost every American, remove loopholes for the very rich and special interests, and to end corporate inversion by making U.S. corporate tax rates among the lowest in the world.

In a press conference held this morning at Trump Tower in Manhattan, the GOP frontrunner said “too few Americans are working, too many jobs have been shipped overseas and too many middle class families cannot make ends meet.” He then unveiled a tax plan that he said directly meets those challenges with four goals:

  1. Tax relief for middle class Americans: In order to achieve the American dream, let people keep more money in their pockets and increase after-tax wages.
  2. Simplify the tax code to reduce the headaches Americans face in preparing their taxes and let everyone keep more of their money.
  3. Grow the American economy by discouraging corporate inversions, adding a huge number of new jobs, and making America globally competitive again.
  4. Doesn’t add to our debt and deficit, which are already too large.

Single Americans who earn less than $25,000 or jointly less than $50,000 as a married couple will not owe any income tax under the Trump plan; heads of household could make up to $37,500 without owing any tax. That accounts for more than half of all U.S. households.

“They get a new one-page form to send the IRS saying, ‘I win,'” Trump said. “Those who would otherwise owe income taxes will save an average of nearly $1,000 each.”

Beyond the 0-percent tax bracket, Trump’s plan would simplify the tax code down to three additional brackets — there are currently seven — with rates of 10, 20, and 25 percent. The 10-percent rate would be for single filers making up to $50,000, married filers up to $100,000, and heads of household making up to $75,000. The 20-percent rate would be for single filers making up to $150,000, married filers up to $300,000, and heads of household making up to $225,000.

The Trump tax plan would also eliminate the marriage penalty and the Alternative Minimum Tax while “providing the lowest tax rate since before World War II.” He also said his plan would eliminate the “death tax” — the federal inheritance tax.

“You earned and saved that money for your family, not the government; you paid taxes on it when you earned it.”

Trump’s plan also calls for business tax rates to drop even more than individual rates.

“No business of any size, from a Fortune 500 to a mom and pop shop to a freelancer living job to job, will pay more than 15 percent of their business income in taxes,” he said. “This lower rate makes corporate inversions unnecessary by making America’s tax rate one of the best in the world.”

The Trump tax plan is revenue-neutral, compensating for the tax cuts by:

  1. Reducing or eliminating most deductions and loopholes available to the very rich.
  2. A one-time deemed repatriation of corporate cash held overseas at a significantly discounted 10% tax rate, followed by an end to the deferral of taxes on corporate income earned abroad.
  3. Reducing or eliminating corporate loopholes that cater to special interests, as well as deductions made unnecessary or redundant by the new lower tax rate on corporations and business income. We will also phase in a reasonable cap on the deductibility of business interest expenses.

CLICK HERE to read the entire Trump tax plan.