Part of Trump's tax proposal would penalize Californians

Andrew Cummings
May 14, 2017

When asked about it at the roll-out briefing, Director of the National Economic Council Gary Cohn called such information a "micro-detail". It would double the standard deduction for married couples to $24,000, while keeping deductions for charitable giving and mortgage interest payments.

It cites results of a study that analyzed taxes paid by 258 Fortune 500 companies from 2008 to 2015 that suggested the companies, though consistently profitable, paid a 21.2 percent average effective tax rate over the period.

Trump's corporate tax cut will bust the federal budget. His plan would increase taxes to limit the tax cuts impact on the budget deficit. Some would no longer have a need for itemized tax deductions anyway because the standard tax deduction would be the better option. That's going to be a tough sell. Income parameters for the three tax brackets were not established, and it did not include specifics on promised tax relief for families with child care expenses. But the outlines of his proposal, released Wednesday, are nothing short of hallucinatory.

For the rich, the gains are very clear and very valuable, including reducing the top income tax rate, eliminating the alternative minimum tax and estate tax, and cutting capital gains.

Mnuchin also wouldn't rule out the possibility that the plan may provide an absolute tax cut for rich people - something he explicitly promised would not happen during his confirmation hearing. "There is no reason why we shouldn't be united again in accomplishing that tax reform".

How does the plan affect individual businesses? "Small and medium-size businesses will be eligible for the business rate as well". This is estimated to bring in an additional one-time total of $250 billion, which the administration wants to use for its infrastructure spending.

"Families with six or more individuals in them could be at a disadvantage because they might actually lose money under the current proposal", Ness said.

Beyond that, the Trump plan doesn't detail what other breaks he'd support curbing.

He did say the administration would work with House Republicans to make the new tax more acceptable.

However, economists say the plan is not almost enough to replace lost revenues, while rising deficits could even take back some of the economic gains.

It's unclear just how much the tax overhaul would help Trump because the proposal still amounts to mainly a series of bullet points - and because the president has steadfastly refused to release his tax returns despite having promised to do so in the past.

What are the chances that this plan is fully implemented?

"We've been briefed on what they're going to do and it's basically along exactly the same lines that we want to go, so we see this as progress being made", Ryan said.

One major problem with Trump's proposal is that, due to procedural rules in Congress, any Republican tax reform will likely have to be written to be temporary - much like the Bush tax cuts, which were scheduled to expire 10 years after their enactment.

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