Corporations would win; national debt would lose,
Small business owners, large corporations and the super wealthy could fare well under President Donald Trump’s tax plan. The middle-class could come out ahead, too, but the plan has too many holes to allow a solid determination.
Here’s a look at the winners and losers:
The winners
Corporations. Trump’s plan would lower the top corporate income tax rate to 20 percent from 35 percent. That would be a huge tax cut for most corporations, even if their tax breaks would be severely limited under the new plan.
Business owners who report business income on their individual tax returns. This is the overwhelming majority of American businesses, from small mom-andpop outfits to large partnerships. The top tax rate for these taxpayers is currently 39.6 percent. Trump’s plan would lower it to 25 percent.
The superrich. Trump’s plan would eliminate the federal estate tax. Under current law, the first $11 million of an estate is exempt for a married couple, meaning only the wealthiest Americans pay it.
U.S.-based international corporations. Trump’s plan would end the practice of taxing the foreign profits of U.S.-based corporations.
The middle class — maybe. Trump’s plan would increase the standard deduction to $12,000 for individuals and $24,000 for a married couple, presumably eliminating the personal exemption. Under current law, the personal exemption is $4,050 and the standard deduction is $6,300, for a total of $10,350.
This provision would allow middle-class families to shield more of their income from taxation. However, it’s impossible to say how they would fare overall because Trump’s plan doesn’t specify the income levels for its three new tax bracket, down from the current seven. Administration officials said Trump’s plan would be “at least as progressive as the current tax code.”
The losers
The national debt. Trump’s plan doesn’t include enough details to precisely project its impact on the government’s finances. But the rate cuts for businesses and individuals are sure to add to the nation’s mounting debt. Administration officials said economic growth generated by the tax cuts would make up the difference, generating more taxable income. However, many experts say their projections for economic growth are unrealistic.
The roughly 30 percent of taxpayers who itemize their deductions instead of taking the standard deductions for mortgage interest and charitable donations. If Trump’s plan became law, many of these taxpayers would probably start taking the larger standard deduction, which might not amount to as much as they are currently able to deduct.
U.S.-based international corporations. They show up as winners and losers because Trump’s plan would impose a one-time tax on an estimated $2 trillion in foreign profits that U.S. corporations have invested overseas.