Trump’s tax plan: What’s in it for him?
Trump’s plan to replace the Affordable Care Act and to slash taxes on the wealthy is likely to provide more revenue for the government than any Republican tax plan in history.
But that won’t necessarily mean a bigger cut to the budget.
Trump’s proposal for the tax cuts for high earners has been criticized by some Democrats and some Republicans as an giveaway to the wealthy, while others have said it’s too generous for middle-class families and would increase the deficit.
Trump has offered several tax breaks for the wealthy to offset the cost of his tax cuts, and Republicans are working to find a way to keep them.
The White House released the plan Thursday, which will likely include more tax cuts and tax increases for the wealthiest Americans.
Among the top earners would be Trump’s $10 million income tax cut, $6 million in tax cuts on investment income, $2 million in mortgage interest and a $2,500 deduction for state and local taxes.
For the middle class, Trump’s proposals include $1.5 million in new tax breaks and an increase in child tax credits, the White House said.
The GOP tax plan will likely have the support of Democrats and the White Senate.
The proposal would create a new 15% tax bracket for those earning $1 million or more, up from 15% currently.
It also would give a tax credit of up to $3,000 to households earning less than $75,000.
The Republican plan would also eliminate the corporate tax rate from 35% to 21%, as well as repeal a tax loophole that lets individuals write off nearly $500,000 in personal debt.
“I think you’ll see a lot of the tax relief that you’ve heard about from Republicans, but it’s also very different from a plan that the Democrats have been pushing for for years,” said Michael Greenstone, a senior policy analyst with the liberal Center on Budget and Policy Priorities.
Greenstone said that while Trump’s budget is ambitious, it still needs to be offset by other policies, such as an increase to child tax credit payments.
The plan would give states an additional $500 billion to spend on education, health care and other programs, Greenstone noted.
The top marginal tax rate on high earners is 20%.
Under the GOP plan, the top rate would drop to 25%.
For middle- and low-income earners, the marginal tax would go up to 39.6%.
For people earning $200,000 or less, the tax rate would go down to 35%, the White President’s Office said.
Trump also would repeal Obamacare’s mandate that people with health insurance or who buy it from their employer must have coverage.
He said in the plan that he would “make it easier for those who want to buy insurance from their employers.”
Trump has also said he would eliminate a tax deduction for the cost-sharing subsidies that help lower-income families buy insurance on the federal marketplace.
“This plan does not allow us to provide tax relief to people who are able to purchase health insurance from the marketplace,” Trump said in a statement released Thursday.
But the plan would increase tax penalties for individuals who are already paying more than $10,000 a year in taxes.
“These are the same people that voted for Donald Trump,” said Sen. Ron Johnson, R-Wis., a supporter of the plan.
“They’ve been telling us this is the best way to do it.
They think it’s the best deal.”
The nonpartisan Tax Policy Center estimated that the GOP tax proposal would add $1 trillion to the federal debt over 10 years.
Trump campaigned on a pledge to cut taxes for the middle and working classes, which would disproportionately hurt the middle classes.
He has promised to cut corporate taxes and reduce the federal deficit.
The tax proposal also contains a proposal to repeal the estate tax, a tax levied on estates worth more than half a million dollars that’s levied on people who inherit money from someone who died before the estate was taxed.
The estate tax is not repealed, but its repeal would save the government $1 billion annually, the nonpartisan Tax Foundation said in July.
A Republican-controlled House has already passed a repeal bill, but the Senate is expected to vote on it.
The Senate Finance Committee voted to repeal it earlier this month.
But Senate Republicans are not expected to get a chance to vote to repeal, or delay, the estate-tax repeal bill this week, with most of their key Republican caucus against it.
“It’s clear the Republican tax proposal has little chance of passing the Senate, and that is because the Senate leadership is willing to compromise with Democrats to keep the Senate in Republican hands,” Greenstone told The Associated Press.