Republican presidential candidate Donald Trump recently announced revisions to his tax plan. And it has already been broken down and analyzed by the Tax Foundation. Individuals would be subject to just three possible rates: 12% for up to $37,500 in income; 15% for up to $112,500; and, 33% for over $112,500 (all double for married couples.) The top capital gains rate would be 20%. It would also increase the standard deduction to $15,000 (currently at $6,300.) Carried interest would be taxed as ordinary income. And there are other changes including a new childcare cost deduction.
As for business taxes, the plan reduces the corporate rate from 35% to 15%. It has a lesser rate of 10% for repatriated foreign profits. But on the negative side for manufacturers, it takes away the Section 199 domestic production activities deduction. The research credit is left intact. Unfortunately, it is not clear that the reduced corporate 15% rate will be applicable to business pass-through income (stay tuned on that.)
The estate and gift tax would be eliminated. However, the inheritors would eventually have to pay on the full gain realized when they sell the asset, without the benefit of a stepped-up basis.
What about the impact on revenues and our federal debt? Well, the new plan is better in that regard than the original. The static evaluation is that it will reduce revenues (increase the debt) somewhere between $4.4 trillion and $5.9 trillion (depending on the unspecified details) over 10 years; that is roughly half of the estimate of the plan he first outlined. The dynamic analysis, factoring in economic growth improvement associated with tax cuts, lessen the overall impact, but those numbers are inherently more speculative.
See the complete analysis and full breakdown from the Tax Foundation.