President-elect Trump’s Tax Plan
Dan Pilla – the author of 14 books and one of the nation’s leading experts on taxpayer rights and the Internal Revenue Service – unpacks the tax reform plan unveiled on the campaign trail by President-elect Donald Trump.
Pilla acknowledges “It is easy to talk about tax reform on the campaign trail but quite another thing to get your policies enacted once you’re in office.” But if Trump holds true to his campaign promises – and if the plan survives what Pilla refers to as “the congressional mix-master” – there are many powerful, positive elements packed into the plan:
- Trump would collapse the seven existing personal income tax brackets into just three. The highest tax rate would be reduced from 39.6 percent to 33 percent.
- Trump would increase the standard deduction for joint filers to $30,000, from $12,600; the standard deduction for single filers would be $15,000. The personal exemptions and head-of-household filing status would be eliminated.
- Trump would lower the corporate tax rate from the current 35 percent (the highest in the developed world) to 15 percent for all businesses, large and small.
- Trump would eliminate the estate and gift tax, the Alternative Minimum Tax (AMT) and the 3.8 percent surtax on net investment income.
What can we expect as a result of these reforms? Among other things, Pilla writes, “[T]axpayers in all brackets would see a reduction in their federal tax burden. Said another way, everyone would have more money in their pockets.”
There’s one feature of Trump’s plan Pilla doesn’t like at all: It would shrink the tax base, removing many Americans from the tax rolls entirely. That’s not a good thing, he writes, because “As more voters are removed from the tax rolls, they have less incentive to check government spending at the ballot box because they have no skin in the game.”