On April 26 Treasury Secretary Steven Mnuchin and Director of the National Economic Council Gary Cohn presented a framework for President Donald Trump’s tax reform plan. The plan largely sticks to the president’s campaign proposals. The plan highlights the following principles:
- Reducing the top corporate rate from 35 percent to 15 percent
- Eliminating the corporate alternative minimum tax
Trump’s campaign tax proposals included provisions that would allow for immediate expensing of purchases of capital assets and limitations on interest expense. Those proposals were not included in the framework presented by Mnuchin and Cohn.
- Reducing the top individual rate from 39.6 percent to 35 percent
- Taxing income from pass-through entities at 15 percent
- Eliminating the 3.8 percent tax on net investment income
- Eliminating the individual alternative minimum tax
- Eliminating all itemized deductions with the exception of mortgage interest and the charitable contribution deduction
- Doubling the standard deduction
- Repealing the estate tax
- Adopting a territorial tax system under which income is taxed in the country in which it is earned, with foreign income not taxed subsequently in the U.S. when profits are repatriated
- Providing a one-time repatriation of deferred foreign profits, the rates and mechanics of which are still to be determined
Notably, Trump’s plan for international taxation does not include the border adjustment tax from the House Ways and Means Committee blueprint.
Mnuchin indicated that the administration believed the plan would be revenue neutral, with additional revenue from projected economic growth making up for lower rates. The administration will provide further details to Congressional leaders and begin the process of converting the principles it outlined into legislative language.