Treasury Secretary Steve Mnuchin and National Economic Council Director Gary Cohn announced the Trump Administration’s tax plan in “broad-strokes” at a White House press conference this afternoon. The proposal is in line with what we predicted earlier today, with a handful of changes and a bit of additional detail. A more detailed comparison between what was announced, Trump’s campaign proposals and the House Blueprint will follow.  For now, here is a brief summary of what we heard:

Business Taxes

  • Corporate tax rate reduced to 15%
  • Pass-through business income also taxed at 15% (with rules to prevent individuals from flowing personal income through pass-throughs to secure the lower rate)
  • Repeal the corporate AMT?
  • Treasury Secretary Mnuchin stated that many corporate deductions would be eliminated but did not give details
  • Deemed repatriation of accumulated offshore earnings taxed at a rate TBD
  • No mention of a destination-based cash flow tax (i.e., no mention of border adjustments, no mention of immediate expensing)
  • Shift toward territoriality – US businesses would only be taxed on US-source income, but mechanism TBD
  • Eliminates the 3.8% Medicare tax on net investment income
  • Capital gains and qualified dividends taxed at 20%

Individual Taxes

  • Three tax brackets (down from 7) – 10%, 25%, 35% (with income threshold for each bracket TBD)
  • Doubles the standard deduction (to $25,200/married couple filing jointly)
  • Repeals the individual AMT
  • Eliminates all itemized deductions (including for state and local taxes) other than:
    • Charitable Deduction
    • Mortgage Interest Deduction
  • Provides for a new child/dependent care tax credit
  • Retains preferential taxation of retirement savings?
  • Repeals estate tax
  • Retains marriage penalty?

After the press conference, the Trump Administration circulated a two-pager outlining the plan. Click here for a copy.