Now that Donald Trump has shocked the world, what does this mean from a tax perspective?
According to DonaldJTrump.com:
“-Every income group receives a tax cut under the Trump plan, with million more being removed from the income tax rolls and low-income Americans paying no income tax at all.
-The greatest percentage reduction in tax bill goes to working and middle class taxpayers:
-A married couple earning $50,000 per year with two children and $8,000 in child care expenses will save 35% from their current tax bill.
-A married couple earning $75,000 per year with two children and $10,000 in child care expenses will receive a 30% reduction in their tax bill.
-Married couple earning $5 million per year with two children and $12,000 in child care expenses will get only a 3% reduction in their tax bill.
-The plan lowers the business tax rate to 15%. The current business rate 35% rate is one of the highest in the world, making domestic investment unattractive. It includes a 10% tax on repatriation, instantly bringing trillions of dollars back into the U.S. economy now parked overseas.”
Other highlights include:
“-The standard deduction will be $30,000 dollars for married couples and $15,000 dollars for single individuals. Most taxpayers will have no need to itemize, simplifying their tax returns and making it easier to file.
-The plan provides a child care deduction for children up to 13 years of age for average child care expense. There’s an income cap, so the new deductions don’t apply to the rich.
-Finally, the plan eliminates the carried interest loophole for Wall Street and the death tax, which falls especially hard on small businesses and farmers.
-There will be no Trans-Pacific Partnership…
The Penny Plan
-The “Penny Plan” would reduce non-defense, non-safety net spending by one percent of the previous year’s total each year. Over ten years, the plan will reduce spending (outlays) by almost $1 trillion without touching defense or entitlement spending.”
According to Zerohedge the President Trump would also have “one-time 10% tax on all foreign earnings not yet taxed by the US.”
For more information on Mr Trump’s tax plan please click here
Armed with a plan that is similar to the proposed plan by GOP lawmakers and with control over both houses; Mr Trump should have a decent shot of getting having his tax plan pass. GOP lawmakers who aren’t on board the Trump Train, face the prospects of some very angry constituent’s if they are the ones who are singled out for foiling MR Trump’s plans. Being on the wrong end of a Donald Trump war usually doesn’t work too well for those involved. Just ask the Bush’s and Clinton’s.
We shall see in due time if this plan passes but my guess is that the final plan should look pretty similar to what we’ve seen proposed by Mr Trump. American’s need relief, especially in Phoenix where we saw our healthcare bills go up 145%!!! (according to the NYT and my own experience). Maybe, just maybe, these tax breaks will help offset the aforementioned Obamacare fiasco.
Tim Picciott CFP® CRPC®
The opinions expressed in this material do not necessarily reflect the views of LPL Financial. The tax proposals set forth may not develop as indicated