Gary Cohn, Chief Economist Advisor of Donald Trump, the President of the United States and Treasury Secretary Steven Mnuchin shared the details of Trump’s tax reform proposal at the White House daily press briefing. The law draft envisages reducing individual and corporate tax rates to the levels as it was promised in the election campaign. They stated that they target to make the American business market the most competitive in the world.
Gary Cohn, who describes the part about the personal income tax, said they aim to simplify the tax system by reducing individual income tax brackets from 7 to 3. With this tax reform proposal, the individual income tax rates of 10, 15, 25, 28, 33, 35 and 39.6 percent will be reduced to 3, 10, 25 and 35 percent of the taxpayers’ income. No information about future income segments for these tax rates was given.
According to this new tax reform, the tax rate for the first 24 thousand dollars will be 0 percent. The tax rate for the first 24 thousand dollars earned by a couple will be 0 percent. Later, standard cuts of the taxpayers will be doubled.
The inheritance tax will also be cancelled with this proposal. The tax rate applied to the capital and dividend profits will be declined from 28 percent to 20 percent. The tax for net investment income applied during the Obama period will also be cancelled.
According to the new tax reform proposal of Trump, all tax incentives other than mortgage credit interest and donations are planned to be also be terminated. Corporation income tax rate will be reduced from 35 percent to 15 percent. In order to provide the return of the trillions of dollars invested abroad to the host country, American companies will be able to return their investments abroad to the USA by only paying tax once.
Economists comment that the items on the proposal for tax reform have largely overlapped with the promises made by Donald Trump in his election campaign. For the enactment of the proposal, it must pass through the US House of Representatives and the Senate