Donald Trump slashes business tax rate by 20%

In a briefing about the proposal Wednesday, Treasury Secretary Steven Mnuchin said the plan calls for eliminating all personal income tax deductions except for those granted for mortgage interest and charitable deductions. Treasury Secretary Steve Mnuchin on Wednesday when announcing the plan said the goal of the proposal is to simplify the USA tax code and the filing system and to spur economic growth. He pays taxes for his businesses through the income tax code, so his plan would slash his own tax liability potentially in half, saving himself tens of millions of dollars.

"The resulting increase of the deficit will have a dampening effect on the economic activity that will offset at least part of the stimulative effects of lower tax rates", said Elemendorf, now dean of Harvard University's John F. Kennedy School of Government. But here's what we know.

Cohn also announced that the administration's proposal would repeal the so-called "estate tax" on holdings transferred from deceased people to their heirs.

Russ Mould, investment director at AJ Bell, said that it is unclear whether any of Trump's proposals will pass through Congress unmolested, especially as the November 2015 Bipartisan Budget Act, which suspended America's debt ceiling, lapsed on 15 March. Mnuchin's explanation was that the tax code is too complex. Add to that the tensions boiling over with regard to North Korea's threatened start of World War III with a nuclear war, the tensions associated with Russia's support of a Syrian regime that murders its own people, and you have a Trump administration stretched about as thin as it can be stretched. They claim an average $18,000 in annual state/local deductions and might fair better with the tradeoff depending on their specific local taxes.

Mnuchin also said the administration plans to simplify the process by which Americans declare their income and pay taxes. They didn't present it like that, of course. A top rate cut for individuals would be more modest, from 39.6 percent to the "mid-30s", said the official, who was not authorized to publicly discuss the proposal before the announcement and spoke on condition of anonymity.

The Trump administration Wednesday unveiled plans to dramatically cut taxes for United States businesses and individuals, slashing the corporate rate to 15 per cent, but the once-in-a-generation overhaul is headed for a tough fight in Congress.

"Large tax-rate differentials encourage abusive tax planning", he added. "About 27 percent goes to the bottom 90 percent of households". The plan would not tax the first $24,000 in income for a couple, which is double the current standard deduction. Management fees, he said, are typically taxed at the current top 39.6% rate.

Experts estimate that the cut in taxes would mean a $4 trillion loss in revenue.

Long on ambition, short on details, President Donald Trump's promise of the biggest overhaul in the history of the American tax system could jolt the Bay Area, shaking up the housing market, afflicting charities and prodding tech giants to bring billions of their assets back home from overseas.

There's another big problem. In setting the top rate of income tax at thirty-five per cent and the rate on pass-through income at fifteen per cent rate, the Trump reform would give high-income earners a great incentive to reclassify themselves as small-business owners, so they would be eligible for the lower rate.

"Our whole housing market is intertwined by those tax deductions", she said. She would save a hundred thousand dollars.

Republicans in Congress are hoping to use budget procedural rules that allow a 51-vote threshold in the Senate to pass tax reform, which would limit the cuts to 10 years. Instead of the seven brackets now in place, there would only be three - a 10 percent, 25 percent and 35 percent.

"The goal is to make it permanent, but there's lots of levers here", Mnuchin said. "And a lot of this stuff is fairly arbitrary'". The National Association of Realtors called the proposal a "non-starter", alleging that it would remove tax incentives for people to buy homes because of changes it would make to certain tax deductions. But he downplayed it, saying it would be resolved in the detailed framing of the tax plan, which could take months.

He vowed it would be "the biggest tax cut and the largest tax reform in the history of our country", in line with Trump's grandiose portrayal.

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