Republican presidential candidate Donald Trump released his highly anticipated tax plan which vows to drastically cut income taxes for millions of Americans.
“It will provide major tax relief for middle income and for most other Americans. There will be a major tax reduction,” Trump said Monday at a press conference at Trump Tower in New York as he unveiled his plan to revamp the tax code. “It’ll simplify the tax code, it’ll grow the American economy at a level that it hasn’t seen for decades.”
The plan Trump unveiled proposes eliminating income taxes entirely for millions of single Americans earning less than $25,000 and married couples earning less than $50,000 a year. Individuals would receive a new one-page form to send the IRS saying, “I win.”
Trump promised that all of this could happen without increasing the national debt because he expects the economy to improve. He said he would also cut “wasteful spending” from the federal budget, although he did not say how or what the total reduction would be. Some are skeptical that the plan is truly revenue neutral.
Here’s what Trump has proposed:
- No more federal income taxes for millions of workers: Individuals who are single and earn less than $25,000 per year will not owe any federal income taxes, along with married couples who jointly earn less than $50,000 per year. Trump estimates that this will help 75 million households. But there is one catch: These workers will still need to send a one-page form to the IRS stating: “I win.”
- Savings of nearly $1,000 for most other taxpayers: Those making more than $25,000 per year or $50,000 jointly would still get a tax break, which Trump estimates will total nearly $1,000 a year in savings for more than 31 million households.
- Four tax brackets instead of seven: Right now there are seven federal income tax brackets. Trump wants to get it down to four. The first would be a zero-percent rate for the households described above. Individuals making $25,001 to $50,000 (or couples making $50,001 to $100,000) would pay 10 percent in federal income taxes and keep most of their current exemptions and deductions. Those making $50,001 to $150,000 (or couples making $100,001 to $300,000) would pay 20 percent and keep more than half of their current deductions. The highest tax bracket would be 25 percent and apply to those making more than $150,001 per year, along with couples making more than $300,001. Those in the highest tax bracket would see most of their deductions disappear.
- Cut the corporate tax rate to 15 percent: Trump would lower the corporate tax rate for all companies — from mom-and-pop shops up to massive Fortune 500 corporations — to 15 percent, which he said will stimulate the economy and make all of these proposed tax cuts feasible.
- Eliminate various penalties and deductions: Trump wants to get rid of the “marriage penalty,” “death tax” and alternative minimum tax, which he says unfairly hurt middle-class taxpayers. He also wants to reduce or eliminate “most deductions and loopholes available to the very rich,” along with “corporate loopholes that cater to special interests.” He would keep deductions for mortgage interest and charitable giving.
- Allow corporations to bring cash back to the U.S.: Trump estimates that U.S. corporations are keeping as much as $2.5 trillion overseas. He wants them to bring that money back into the country and would offer a one-time incentive of a deeply discounted tax rate of 10 percent. After that, Trump would no longer allow corporations to defer taxes on income earned overseas, although he would keep the foreign tax credit.