WASHINGTON—The Trump administration has released an outline for tax reform that, among other things, calls for sharply lower taxes for both corporations and individuals.
The tax proposal issued April 26 would:
- Replace the existing seven income tax brackets with three of 10, 25 and 35 percent;
- Nearly double standard deductions for married couples, to $24,000 from $12,600;
- Eliminate alternative minimum and estate taxes;
- Lower the corporate tax rate to 15 from 35 percent;
- Allow small businesses that use the individual tax rate to use the 15-percent tax rate; and
- Give tax breaks to companies that repatriate profits currently held in other countries.
One of the most controversial provisions considered by the Trump administration — the border adjustment tax (BAT) — is not part of the plan, although Treasury Secretary Steven Mnuchin said it may be introduced later in a revised form.
Essentially, the BAT would offer tax breaks to U.S. companies that export goods overseas, but add a 20-percent tax on goods imported into the U.S.
Advocates of the BAT — including U.S. corporations heavily dependent on export business — insist the tax will create incentives to keep their manufacturing facilities in the U.S.
However, BAT opponents say the tax could cost consumers as much as $1,700 per year each in extra charges on commonly purchased goods.