This week, the White House released the broad contours of President Trump’s comprehensive tax reform plan. The plan contains numerous differences from the tax plan recently released by House Republican Leadership and is expected to jump start tax negotiations between the White House and Congress.
The Trump tax plan would slash both the corporate rate and the small business pass-through rate to 15%. The plan would also call for three tax brackets on the individual side of 10%, 25% and 35%. In addition, the plan would double the standard deduction for married couples to $24,000 while eliminating most other deductions except for the mortgage interest and charitable deductions. The plan would also fully repeal the estate tax and the alternative minimum tax.
Additionally, the Trump proposal would also repeal the Affordable Care Act’s 3.8% tax on certain investment income.
The Big “I” supports the concept of wholesale reform of the tax code with the stipulation that any proposal fairly address small businesses and individual rates along with corporate rates. The majority of IIABA member businesses file at individual tax rates since they are organized as pass-through entities such as Subchapter S Corporations, Partnerships and Sole Proprietorships. The Big “I” advocates that any tax code overhaul should provide simplification and certainty for small businesses, along with their C Corporation counterparts.
The Big “I” praised the Trump administration’s proposal because it would level the playing field for C corporations and pass-throughs. Addressing both small business and corporate tax rates together would not only provide the level playing field needed to spur economic growth, but would also help prevent gaming of the tax system.
Wyatt Stewart is Big “I” senior director of federal government affairs.