While both President-Elect Donald Trump and the House Republicans view our tax code as being fundamentally flawed, their approach to fixing the tax code has taken different routes. On June 24th, 2016, the House Republicans, led by House Speaker Paul Ryan (R-Wis.) unveiled a plan for sweeping tax reform.
The House Republicans are first aiming to reduce the number of individual tax brackets from 7 to 3, with tax rates of 12, 15, and 33 percent. Regarding the standard deduction, both the House Republicans and Donald Trump seek to increase the standard deduction. The House Republicans’ plan includes an increase of the standard deduction for single filers from $6,300.00 to $12,000.00 and increase the married couples’ deduction from $12,600.00 to $24,000.00. Donald Trump’s plan, meanwhile, calls for a greater increase on the taxpayers’ standard deduction. Increasing individuals’ standard deduction to $15,000.00 and married couples’ standard deduction to $30,000.00. Both plans intend on eliminating the Alternative Minimum Tax and the Estate Tax. The tax plans also differ slightly on their treatment of business taxation. The current top rate for corporations is 35 percent. Donald Trump intends to cut this rate from 35 percent to 15 percent, whereas the House Republicans’ plan intends on decreasing the tax rate from 35 percent to 20 percent. Their plans also differ on the treatment of offshore profits. Whereas Donald Trump intends on taxing all off-shore profits at a rate of 10 percent with credits for foreign taxes paid, the House Republicans’ plan includes a territorial system of taxation, which would tax companies only on goods and services sold in the U.S.
Julie Camden of Camden & Meridew, P.C. practices in the areas of tax and bankruptcy law. Julie has litigated various issues related to individual and corporate tax obligations. Please contact our office at 317-770-0000 or complete our online contact form if you would like to explore tax planning options.
This website supplies general information about the law but it is provided for informational purposes only. This content does not create an attorney-client relationship and more importantly is not meant to constitute legal advice. You should not act on any of the information contained herein without first consulting an attorney.