Trump Calls for Complete Overhaul of Tax System
Trump Calls for Complete Overhaul of Tax System
Calling it the “biggest tax cut in history,” President Donald Trump last week laid out his administration’s plan to completely overhaul the nation’s tax system. Tax reform was one of the biggest calling cards of the new president during his campaign, which ended in victory last November. The president is hoping to convince both the public, as well as legislators in the nation’s Capitol, that now is the time to “unrig” the tax code and that his plan will accomplish that.
Will Trump’s Taxes Go Up?
Trump promises to “get rid of the loopholes and complexity that primarily benefit the wealthiest Americans and special interests.” And he even went so far as to hint that his own taxes would go up under his plan. That remains to be seen, as does whether or not he’ll be able to convince lawmakers to pass his plan. But that’s a topic for another day. Let’s take a closer look at some of the specifics of Trump’s big plans.
A Closer Look at the Details
One of the biggest reforms Trump is hoping to make is lowering the corporate tax rate from its current 39.1 percent mark all the way down to 20 percent. The president also wants to reduce the number of personal income tax brackets and lower the highest rate from 39.5 percent to 35 percent. He also wants to double the standard deduction, increase the child tax credit, and raise the threshold to qualify for that credit. Lastly he wants to repeal the Alternative Minimum Tax (AMT) and kill off the estate tax. So let’s touch on those last two a little more in-depth.
Repeal Alternative Minimum Tax
The AMT has been around since the late 60’s and most people have never had to worry about it. It was originally created to ensure that the wealthiest taxpayers couldn’t use loopholes and their deductions to get away with underpaying on their taxes. The AMT runs on its own set of rules, which are different from the regular tax code. At the moment, it sounds like Trump is only calling for a repeal of the individual AMT. These days, due to inflation, the AMT is affecting a lot more taxpayers than it used to. In many cases, it is not affecting those who it was actually created for, which is why many have called for its repeal. The biggest question is how would the government replace the money it brings in? Trump’s answer: by eliminating several deductions in the tax code.
Eliminate the Estate Tax
Meanwhile, the administration also wants to eliminate the estate tax that currently applies to estates valued over $5.5 million. Even though this tax affects only about one out of 500 taxpayers (or 0.2 percent) that are wealthy enough to pay it, the president and many others have been calling for its repeal for a number of years. One interesting note, the estates’ of 13 of the 24 members of Trump’s cabinet would currently be on the hook to pay this tax. The other side of this is how it could affect the other 99.8 percent who don’t have to worry about the estate tax. Some worry that the current “tax-free step-up” that the heirs of those 99.8 percent enjoy when their benefactor dies could be eliminated as well with the repeal of the estate tax. That could also eliminate some substantial tax breaks for the 99.8 percent to help cover the lost revenue from the estate tax.
Still, Work to Be Done
Of course, the rhetoric has already begun from all sides, including politicians, the media, tax professionals and certainly so-called financial experts. It remains to be seen if the president’s proposals will be able to become law, as so far, pushing legislation through the House and Senate has been anything but easy. For the new president.
We hope you found this article about “Trump Calls for Complete Overhaul of Tax System” helpful. If you have questions or need expert tax or family office advice that’s refreshingly objective (we never sell investments), please contact us or visit our Family office page or our website at www.GROCO.com. Unfortunately, we no longer give advice to other tax professionals gratis.
To receive our free newsletter, contact us here.
Subscribe to our YouTube Channel for more updates.
Alan Olsen, is the Host of the American Dreams Show and the Managing Partner of GROCO.com. GROCO is a premier family office and tax advisory firm located in the San Francisco Bay area serving clients all over the world.
Alan L. Olsen, CPA, Wikipedia Bio
GROCO.com is a proud sponsor of The American Dreams Show.
The American Dreams show was the brainchild of Alan Olsen, CPA, MBA. It was originally created to fill a specific need; often inexperienced entrepreneurs lacked basic information about raising capital and how to successfully start a business.
Alan sincerely wanted to respond to the many requests from aspiring entrepreneurs asking for the information and introductions they needed. But he had to find a way to help in which his venture capital clients and friends would not mind.
The American Dreams show became the solution, first as a radio show and now with YouTube videos as well. Always respectful of interview guest’s time, he’s able to give access to individuals information and inspiration previously inaccessible to the first-time entrepreneurs who need it most.
They can listen to venture capitalists and successful business people explain first-hand, how they got to where they are, how to start a company, how to overcome challenges, how they see the future evolving, opportunities, work-life balance and so much more..
American Dreams discusses many topics from some of the world’s most successful individuals about their secrets to life’s success. Topics from guest have included:
Creating purpose in life / Building a foundation for their life / Solving problems / Finding fulfillment through philanthropy and service / Becoming self-reliant / Enhancing effective leadership / Balancing family and work…
MyPaths.com (Also sponsored by GROCO) provides free access to content and world-class entrepreneurs, influencers and thought leaders’ personal success stories. To help you find your path in life to true, sustainable success & happiness. It’s mission statement:
In an increasingly complex and difficult world, we hope to help you find your personal path in life and build a strong foundation by learning how others found success and happiness. True and sustainable success and happiness are different for each one of us but possible, often despite significant challenges.
Our mission at MyPaths.com is to provide resources and firsthand accounts of how others found their paths in life, so you can do the same.
Could You Pay More to Drink Soda in Berkeley?
Could You Pay More to Drink Soda in Berkeley? We all know that obesity is a problem in our country. Activists and other interested parties continue to work on ways to help curb this growing problem. Indeed, obesity is neither good for individuals or for our country. However, would creating a new tax to help…
What Happened to California’s Tax Revenue in May?
Where has all of California’s money gone? Ok, so the state isn’t bankrupt or anything like that, but according to recent reports, the state’s tax revenues fell short by 5.5 percent in the month of May. That marks the first time in six months that California’s revenues have not reached expectations. In fact, that 5.5…
Beware the Pump: Another Gas Tax Is on the Way
If you’ve had enough with California’s high gas prices, then you might not want to keep reading, because just when you thought things couldn’t get any worse, they are about to. That’s because when 2015 rolls around California residents are going to have to pay another new gas tax. In fact it’s a double-digit hike…
Try These Five Tips For Tax Savings in 2014
Everyone loves to save on their taxes, especially since it seems like the government never runs out of ways to add to American’s tax bill. So let’s discuss some helpful tips to reduce your tax bill. Although it might be too late to implement these ideas for last year’s return – unless you file an…