Former President Donald Trump has revealed a bold tax plan that aims to greatly change the current tax system. His proposal includes several notable changes for both individuals and corporations. One of the most notable features is the elimination of income tax for individuals who earn under $150,000 each year. Additionally, it calls for exempting overtime pay, tips, and Social Security benefits from taxation.
Former President Trump's tax plan proposes eliminating income tax for individuals earning under $150,000 and exempting overtime pay, tips, and Social Security benefits.
Trump also wants to extend certain provisions from the 2017 Tax Cuts and Jobs Act, such as removing the $10,000 cap on state and local tax deductions and creating a new deduction for auto loan interest on American-made vehicles.
In terms of corporate taxes, Trump proposes to lower the corporate tax rate from 21% to 20% for all businesses, and further reduce it to 15% for companies that manufacture in America. He aims to eliminate the corporate alternative minimum tax and make 100% bonus depreciation permanent for eligible business property. This plan also includes extending and expanding the Qualified Business Income deduction.
To help fund these tax cuts, Trump intends to impose a 10% tariff on most imported goods and greatly increase tariffs on imports from China, Canada, and Mexico. He believes that revenue from these tariffs will help offset the costs of his proposed tax cuts. Additionally, ending overseas tax scams is part of his plan to generate fiscal income.
Trump's plan also suggests eliminating the federal estate tax entirely. If that doesn't happen, he wants to keep the current 40% estate tax rate. However, some proposed changes might increase taxes for the bottom 80% of households by 2034. The largest tax cuts are expected to benefit the top 5% of income earners.
Economists predict that Trump's plan could reduce federal revenue by $5-11 trillion over ten years. This could lead to a higher debt-to-GDP ratio, increasing the risk of a debt spiral and higher interest costs in the future.
