Trump Introduces Biggest Tax Refom Plan in USA

2019 ias preliminary exam test series

U.S. President Donald Trump administration has unveiled the broad outlines of its tax reform plan. This plan is described it as “the biggest tax cut and the largest tax reform in the history of USA.”

Touted as a ‘landmark proposal’, Trump’s tax plan proposes to cut the U.S.’s individual income tax rate from 39.6 percent to 35 percent, and reduce the tax brackets from seven to three – 10 percent, 25 percent and 35 percent.

Here are the main components of the plan:

-Lower individual income tax rates (including for wealthy Americans). The number of individual income tax brackets would be reduced to three, with rates of 10 percent, 25 percent, and 35 percent.

-Lower corporate income tax rates. The business tax rate would be cut to 15 percent, and the cut would apply to both corporations and pass-through entities.

-A doubling of the standard deduction and the elimination of most itemized deductions (except for the mortgage interest and charitable contribution deductions).

-The elimination of the estate tax and the alternative minimum tax.

-The Trump administration also proposed tax relief for families with child and dependent care expenses.

-Trump’s tax plan would also double the standard deduction for married couples to USD 24,000 and repeal the estate tax.

-Notably, the plan does not include mention of the controversial border adjustment tax championed by Speaker of the House Paul Ryan and other GOP politicians, although it does express support for a territorial tax system. The administration is also reportedly considering proposing changes to the Child and Dependent Care Credit, meant to help middle- and lower-income families with childcare costs (its previous plan was criticized for delivering the bulk of its benefits to high-income Americans).

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