White House Unveils Tax Reform Plan

By:
Chris Gaetano
Published Date:
Apr 27, 2017
ChangesAheadSquare

The White House released its proposed plan for tax reform, which the administration has branded "The Biggest Individual And Business Tax Cut in American History." The proposal was released as a short one-page outline, and as such as short on specific details. Broadly, however, the plan proposes: 

* Collapsing the seven tax brackets into three: 10 percent, 25 percent and 35 percent. 
* Doubling the standard deduction; 
* "Providing tax relief for families with child and dependent care expenses"; 
* Eliminating "targeted tax breaks that mainly benefit the wealthiest taxpayers"; 
* Protecting home ownership and charitable gift tax deductions; 
* Repealing the Alternative Minimum Tax;
* Repealing the estate tax;
* Repealing the 3.8 percent investment tax that funds the Affordable Care Act; 
* Setting the business tax rate at 15 percent; 
* Establishing a territorial tax system, versus the worldwide tax system currently used; 
* A one-time tax on trillions of dollars held overseas; and
* "Eliminating tax breaks for special interests"

A later press briefing by Treasury Secretary Steven Mnuchin and Director of the National Economic Council Gary Cohn, however, went into further detail about what exactly some of these proposals would entail.

Mnuchin, for example, said that by "eliminating tax breaks," the White House intends to "eliminate on the personal side all tax deductions other than mortgage interest and charitable deductions," something he promised would be a sweeping reform. This, incidentally, would also include deductions for state and local taxes, which has long been a sticking point for Republican legislators who believe it effectively subsidizes high-tax states. 

He also noted that the proposed 15 percent business tax rate would apply to all companies regardless of size, but that "we will make sure there are rules in place so wealthy people can't create pass-throughs and use that as a mechanism to avoid paying the tax rate that they should be on the personal side." 

Other parts of the proposal, though, remained vague. Mnuchin and Cohen said they do not yet have a plan for what the income thresholds for the 10, 25 and 35 percent tax brackets would be. Further, they did not have a specific rate for the one-time repatriation tax, though said they would be "competitive." Also, while the pair said during the briefing that the plan would pay for itself through growth and closing loopholes, they said that the Treasury Department was still working out the specifics of how that would happen. 

The administration's budget director, Mike Mulvaney, said this vagueness was intention, as the outline was not meant to be a final word but, rather, the start of the conversation, according to CNBC. He also said that, learning his lesson from the meltdown of the American Health Care Act, the president would be personally involved in this process. 

The administration, in its one-page summary, said that further details would be developed throughout next month, with the administration holding listening sessions with stakeholders  as well as legislators. 

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