Trump official floats cap on tax deduction

Whether it’s regarding retirement planning or financial and estate planning, most people in the US are watching Donald Trump and his team carefully to see what tax decisions might be made in the coming months.

Brady was speaking to reporters after a speech on tax reform at the conservative Heritage Foundation think tank, where he promoted his own plan to lower the corporate income tax rate from 35 percent to 20 percent and repatriate an estimated $2.6 trillion in USA corporate profits stashed overseas.

Populist-elect Donald Trump is boldly taking on one the most politically popular tax break on the books in an effort to revive America’s middle class.

Because Trump’s plan would include big tax cuts for business-and Mnuchin insisted that would not change-it inevitably will cut taxes for the rich, who own those businesses. The top rate on ordinary income would fall to 33% from 29.6%, and capital-gains rates would fall as well.

This isn’t to say Trump is totally off-track, though.

Trump’s tax plan would also cut personal income taxes for the well-to-do and rich.

Against this background of rising tax rates and a shift in the tax burden to those with the highest income levels, it would not be surprising if Congress reduced the top tax rates and broadened the tax base.

“Taxes are way too complicated and people spend way too much time worrying about ways to get them lower”, Mnuchin said. If they don’t, they could see their income-tax rate jump from 15% to 25% under Trump. That would take the taxable income to $53,550, resulting in a reduction of $21,450. When they are coupled with major fiscal reforms, those tax cuts helped drive strong economic performance relative to the US and most other G7 countries from 1997 to 2007. However, it bears little resemblance to any of the multiple plans that Trump proposed during the campaign. Advisers to wealthy families and their offices also anticipate that the new administration’s approach to estate and gift taxes could negate rules they were bracing for, which sought to limit tax breaks on transferring wealth.

These policies are aimed at increasing the jobs rate. Asked if “the lion’s share of the tax cuts go to the wealthy”, Mnuchin replied, “Well, that’s not the case at all”. His own plan called for cutting the corporate tax rate to 15%, low enough that corporations wouldn’t go out of their way to avoid USA taxes.

The standard deduction for couples filing jointly is $12,600 and for singles it is one half that at $6,300 for this year.

All of it is perfectly legal, made so by a tax code riddled with loopholes favoring large corporations, allowing them to claim myriad deductions and pursue tax avoidance schemes such as parking profits overseas to avoid paying taxes on them.

Traditional investment tax credits have been used successfully in the past to encourage businesses to expand their capacity to produce the products they make and sell. Let’s not get screwed any longer. Eliminating the estate tax (while taxing capital gains of large estates at death, as Trump also proposes) would lose 4 billion over the next decade. If Canada becomes less competitive, it risks losing investment dollars that may gravitate to other places (recall that Burger King’s recent merger with Tim Hortons and subsequent move to Canada was partly driven by our corporate tax advantage). He is the author of “Fair Not Flat: How to Make the Tax System Better and Simpler”.

For individual taxpayers, Trump has expressed an interest in implementing a child and dependent care deduction to replace the existing credit that is limited for many taxpayers due to income limitations.