Know the Key Features of Donald Trump’s Tax Plan
Know the Key Features of Donald Trump’s Tax Plan
22nd December 2017, President Donald Trump has signed certain Tax Cuts and Jobs Acts, this official text of the bill would still needs to be estimate by congressional scorekeepers like the Joint Committee on Taxation.
The tax plan will turn into the first big legislative win of his presidency which will be based on series of sacrifices, negotiation and decision to extract revenue from particular interest group.
- Corporate tax rate
President Donald Trump proposed a cut down in the corporate tax rate from 35% to 20 %. He proposed a 15% rate in his election campaign and tax writers struggled in recent weeks to find the revenue to get it as low as 20 %.Cutting the official tax rate to 20%, leaves the US companies in unfriendly situation, in the global competition.
- Foreign business earnings
House of Representatives have decided to raise revenue by targeting a stash of $2.6tn in earnings that US companies have collected offshore. But they are charging high than expected toll on the money. But companies like Apple will have to pay a one-off toll of 12 percent on the money over a period of eight years. Now this is 2 % that President Barack Obama has already proposed. The one-off rate is 5% for the earnings that have already been reinvested. But they have planned a complex set of procedures to dissuade international tax avoidance that mean many companies will still be taxed overseas.
- Tax break on debt interest
Companies will not be allowed to withhold interest expenses beyond 30% of their taxable income. But President Donald Trump has given certain notable exception given in the real estate sector. As real estate companies depend on debt, will get their internal cost deducted in any condition. But those that are exempted will not be given the chance to benefit from a measured proposed to offset the pain of ending interest deductibility.
- Small business
Not all small businesses are structured as corporations, Republicans had to take certain specific measured to give them a tax cut and avoid charges they were being left behind. The scheme is to cut the top rate for pass-through from 39.6% to 25%. But Republicans wants the business owners pay the reduced 25% rate on only 30 % of their earnings while the remaining 70% would be taxed at individual rates.
- Individual tax rates
The plan collapses the US’s seven current income bands to four of 12, 25, 35 and 39.6%, whereas the top tax rate remains the same, but the level at which it applies will jump significantly from $480,500 for married couples to $1m.
Tax writers pointed out that middle class families would get their benefit from a move to double standard tax deduction that would let a married couple earn $24,000 tax-free, up from $12, 7000.
President Donald Trump promised to end the AMT for individuals. He assured to increase taxes on carried interest profits, not just stiffen requirements.
