GOP tax plan calls for cutting the corporate tax rate from 35 percent to 20 percent
“President Donald Trump and congressional Republicans are proposing a tax plan that they say will be simple and fair,” The Associated Press reports.
“In a document obtained by The Associated Press on Wednesday, their outline a blueprint for almost doubling the standard deduction for married taxpayers filing jointly to $24,000, and $12,000 for individuals,” AP reports. “The plan calls for cutting the corporate tax rate from 35 percent to 20 percent. The GOP proposal also calls for reducing the number of tax brackets from seven to three with a surcharge on the wealthiest Americans.”
“The plan also leaves intact the deduction for mortgage interest and charitable deductions,” AP reports. “The White House and Republicans plan a formal roll out later Wednesday.”
“President Donald Trump has two red lines that he refuses to cross on overhauling taxes: the corporate rate must be cut to 20 percent and the savings must go to the middle class,” AP reports. “Gary Cohn, the president’s top economics aide, says any overhaul signed by the president needs to include these two elements.”
“Republicans will unveil sweeping changes to America’s tax code Wednesday in a proposal that dramatically lowers taxes on businesses and many households but remains silent on thorny issues such as how to pay for it all,” Ylan Mui reports for CNBC. “The framework—a joint product of the Trump administration and Republican leadership—calls for lowering the corporate rate from 35 to 20 percent. It would also bring down the rate for so-called pass-through businesses to 25 percent; currently, they are taxed under the individual code.”
“The plan, described to CNBC by multiple sources, would collapse the current seven personal tax brackets to just three: 12, 25 and 35 percent. It eliminates the deduction for state and local taxes, but nearly doubles the standard deduction. The child tax credit also would be substantially increased, though it was unclear by exactly how much,” Mui reports. “The tax reform plan being unveiled Wednesday cuts the top individual income tax rate from 39.6 to 35 percent, although lawmakers received the green light to add a higher fourth rate to respond to pushback, according to a source familiar with the discussions.”
“The framework raises the bottom tax rate from 10 to 12 percent, which primarily affects low-income households. Doubling the standard deduction and expanding the child tax credit could offset that increase for poor households—and possibly result in more people paying no taxes at all,” Mui reports. “But experts said that the income brackets that lawmakers set for each tax rate would determine whether that is the case.”
MacDailyNews Take: As we wrote back in April: “We’ll see where it all ends up (the corporate tax rate won’t end up being 15%, but it may end up being 20-25%, which is certainly better than the stifling 35% it is now). As we’ve been saying for many years now, the U.S. corporate tax rate is way too high. Obviously.”
Apple CEO Tim Cook and U.S. President Donald Trump at tech summit in June 2017Under the current U.S. corporate tax system, it would be very expensive to repatriate that cash. Unfortunately, the tax code has not kept up with the digital age. The tax system handicaps American corporations in relation to our foreign competitors who don’t have such constraints on the free flow of capital… Apple has always believed in the simple, not the complex. You can see it in our products and the way we conduct ourselves. It is in this spirit that we recommend a dramatic simplification of the corporate tax code. This reform should be revenue neutral, eliminate all corporate tax expenditures, lower corporate income tax rates and implement a reasonable tax on foreign earnings that allows the free flow of capital back to the U.S. We make this recommendation with our eyes wide open, realizing this would likely increase Apple’s U.S. taxes. But we strongly believe such comprehensive reform would be fair to all taxpayers, would keep America globally competitive and would promote U.S. economic growth. – Apple CEO Tim Cook, May 21, 2013
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