This afternoon, Treasury Secretary Steven Mnuchin and National Economic Council Director Gary Cohn announced the principles of the Trump Administration’s proposal for tax reform:

Individual Taxation

  • Reducing number of tax brackets from 7 to 3—10 percent, 25 percent, and 35 percent brackets
  • Standard deduction increased to $24k for married couples
  • Repealing AMT
  • Return top capital gains and dividend rate to 20 percent by getting rid of 3.8 percent Obamacare Tax
  • Repealing Estate tax
  • All personal deductions will be eliminated other than mortgage interest and charitable contribution (that includes deduction for state and local taxes and deduction for healthcare); unclear on investment-related expenses such as investment interest

Business Taxation

  • A reduction in the corporate tax rate to 15 percent
  • A similar reduction in the effective tax rate for small and medium sized businesses (implying passthroughs) to 15 percent (unclear how this will be structured)
  • A one-time repatriation tax on all offshore earnings of U.S. corporations (the exact rate still being negotiated with Congress)
  • A switch to a territorial system of international taxation
  • No mention of (i) border adjustment, (ii) interest deductibility or capex expensing, or (iii) revenue neutrality