The White House says it’s the biggest, baddest tax cut in history.
The plan largely hews to tax-cut proposals Mr. Trump made during his presidential campaign last year, but it includes several crucial changes. Most notably, Mr. Trump is proposing to repeal a provision of the tax code that allows individuals to deduct the state and local taxes they pay from their reportable income. That will hurt residents of high-tax states such as New York, New Jersey and California and spur objections from some Republican lawmakers in those states.
Mr. Trump is also proposing a 35% top tax rate for individuals, down from today’s 39.6% rate but above the 33% rate he backed during the campaign. Lower brackets would be set at 10% and 25%, and the standard deduction for individuals would be doubled.
The corporate tax rate would drop to 15% from 35%, and U.S. companies would owe little or no tax on their future foreign profits. The tax rate on business income reported on individual returns would also drop to 15% instead of being taxed at individual tax rates.
Mr. Trump’s plan leaves several crucial issues unresolved, including whether companies could immediately write off capital expenses, where to set the one-time tax rate on U.S. companies’ stockpiled foreign earnings, how a break for child care would be structured and where the tax brackets for individuals would be set.