The Trump administration today released its long-awaited principles for tax reform. The proposal, which focuses on creating economic growth and simplifying personal taxes, was touted by Treasury Secretary Steven Mnuchin as “the biggest tax cut and the largest tax reform in the history of our country.”
“The president and I and others in the administration fundamentally think we can get to 3 percent sustained economic growth,” Mnuchin said at an American Bankers Association-sponsored event in Washington, D.C., today. “That’s very achievable. Tax reform is critical to it, regulatory reform is critical to it.” He added that gains from economic growth would bring in revenue to support the administration’s plan.
Key provisions in the proposal include a 15 percent tax rate for business income (including C corporations and pass through entities), a territorial system, a one-time tax on un-repatriated foreign earnings and the elimination of tax breaks for special interests. For individuals, the plan calls for three rate tiers of 10, 25 and 35 percent. It would also double the standard deduction, provide additional tax relief for family and dependent care expenses and repeal the alternative minimum tax and the death tax. The plan would maintain the deductions for charitable contributions and mortgage interest.
Absent from the proposal were mentions of a border adjusted tax or change in the deductibility of net interest income, both of which were provisions supported by the House “Better Way” blueprint for tax reform. Mnuchin added that the administration’s plan is intended to be used in discussions with House and Senate policymakers as a bill is drafted and debated. While he did not identify a concrete deadline for passing tax reform legislation, he said that “we want to move this as fast as we can.“
ABA President and CEO Rob Nichols, who also spoke at the tax-reform event prior to the administration’s release of its tax plan, expressed the association’s general support for common-sense tax reform that would decrease complexity and stimulate economic growth. “A stronger economy is good for our customers and the country, and that’s good for everyone, including our nation’s banks,” Nichols said. “High taxes are the number one concern of small businesses, and tax reform affects all bank customers. We certainly want to understand that impact.”
ABA will continue to evaluate the proposal and engage with lawmakers and the administration as tax reform moves forward.