Published: Wed, May 03, 2017
Markets | By Lucia Cruz

Claims about Trump's tax plan don't hold up

Claims about Trump's tax plan don't hold up

President Donald Trump has released a one-page plan to completely reform the tax code.

Maybe you don't care about all the rich people who stand to benefit from this, because you believe cutting taxes on pass-through income will spur job creation and economic growth. This is White House economic adviser Gary Cohn.

"We are going to double the standard deduction, so that a married couple won't pay any taxes on the first United States dollars 24,000 of income they earn". "Because of these heavy investments, we have past losses that we can use to offset taxes for quite a while".

The tax rate for corporations and most businesses would be reduced to 15 percent. But plenty of ginormous companies get taxed this way, including hedge funds, big law firms, publicly traded partnerships and even - coincidentally? - the Trump Organization. On the campaign trail, Trump called for doing away with tax breaks for carried interest.

This approach is created to stop multinationals from relocating their legal domiciles to low-tax nations, a practice known as a tax inversion, and to otherwise stop sheltering overseas profits from U.S. taxes, which is now accomplished by shifting intangible assets to low-tax nations.

One of those pesky details is how Trump will structure the tax rates on individual income.

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

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"If more homebuyers have more money in their pocket, then the likelihood that they will spend a portion of their money on housing is increased, but I share some of the concerns that the Realtor associations and some others have expressed", Thorpe said.

"We're exhausted of in this country having the highest business tax rates, taxing on worldwide income and leaving trillions of dollars offshore", Mnuchin said. Trump's tax plan would also end the alternative minimum tax, a move that would benefit the richest Americans, including President Trump. It has evolved over the years and now impacts about 5 million households, majority making between $200,000 and $1 million a year. Because of that, he instead paid $38 million. Yet the elimination of most deductions could nudge some wealthier Americans into higher brackets, he says.

Maybe it's the bullet point that promises to "eliminate targeted tax breaks that mainly benefit the wealthiest taxpayers", immediately followed by three bullet points pledging tax breaks that would nearly exclusively benefit the wealthiest taxpayers. It simply says Trump wants to "eliminate targeted tax breaks that mainly benefit the wealthy" and "eliminate tax breaks for special interests". This year, about 5,200 estates will pay the tax, according to the Tax Policy Center.

With the administration's proposed higher standard deduction, for example, more taxpayers may choose not to itemize deductions for things like home mortgage interest or chartable contributions, he offered.

Rich people, including Trump, tend to report a lot of business income, Williams said. The true effect will depend on how the Trump administration defines a small-business owner.

For example, Treasury Secretary Steve Mnuchin says it will be the biggest tax cut and the largest tax reform in USA history. Because unless the growth that Secretary Mnuchin promises is considerably more tangible than the growth that resulted from Gov. Brownback's tax cuts, the federal deficit will grow by trillions more dollars. Most everyone fears it, but it's already been so watered down as to apply only to estates worth at least $5.5 million.

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