We bring you all the details about President Donald Trump’s proposed tax cuts and how he wants to reduce taxes across the board for businesses and individuals.
President Donald Trump has made tax reforms the cornerstone of his administration’s plans for the country. He said in an interview with Fox News that Americans could expect significant tax cuts from him and that it would before the end of 2017 itself.
Trump promised wide-ranging tax cuts during his campaign and said that he would do away with a number of regulations that both companies and individuals had to reckon with. The ultimate goal is to encourage businesses to invest in America and create millions of new jobs.
President Trump has focused on reducing the corporate income tax rate from the present level of 35% down to 15%. If this measure is implemented, it would be a massive boost to US businesses, as the corporate tax rate here is amongst the highest in the developed world.
While the Republicans in the Congress have said that they would be happy with a 25% corporate tax rate, Trump wants to go further. This compelled the House Republicans to reduce their proposed tax rate to 20%.
Trump wants tax cuts across the board for individuals and to reduce the present number of seven tax brackets to just three. He wants to simplify the standard deductions and allow $24,000 for families and $12,000 for individuals.
One of the far-reaching proposals from President Trump is to do away with the death tax. This was first introduced after the Civil War and revived during the World War I. It has yet to be removed and has been a constant menace to many families around the country.
The alternative minimum tax will be done away with. This is a special tax formula that was intended to target millionaires, but unfortunately, hits mostly middle-class Americans.
The alternative minimum tax raised $28.2 million for the U.S. Treasury Department from 4.1 million taxpayers. So while taxpayers will certainly benefit from its removal, the government would lose out on a lot of revenue. So the Trump Administration has to think of ways to make up for the revenues lost from the removal of this tax.
As of today, there are 7 income tax brackets in the US - 39.6%, 35%, 33%, 28%, 25%, 15% and 10%. They are likely to be simplified into three tax rates of 33%, 25%, and 12%.
Also, in a significant move, Trump would make it easier for US firms such as Apple that earn billions of dollars overseas to repatriate the earnings back to the United States.
As of today, over $2 trillion belonging to US companies is locked overseas because of the expectation that the companies have to pay the highest corporate tax rates on them. Trump wants to simplify some of the tax laws so that companies like Apple would feel more comfortable about bringing their earnings back to the US.
Stay tuned for more news and analysis from the US on issues related to taxation and finance.
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