November 15, 2016

Fact Sheet: Comparison of House GOP Tax Plan, Trump’s Initial Tax Proposal and Trump’s Revised Tax Proposal

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Ryan Plan

Initial Trump Plan

Revised Trump Plan

10-year Cost (ITEP model) $4 trillion

(Plan says it’s revenue-neutral – with dynamic scoring, relative to current policy baseline, and assuming repeal of all Obamacare-related taxes)

$12 trillion $4.8 trillion
Top 1% share of tax cuts (ITEP model) 60% 37% 44%

PROVISIONS

Individual Taxes
Brackets and rates 3 brackets: 12%, 25% & 33% 3 brackets: 10%, 20% & 25% 3 brackets: 12%, 25% & 33%
AMT Eliminated Eliminated Eliminated
Estate Tax Eliminated Eliminated Eliminated, but capital gains above $5 million/ $10 million would be taxed at death
Generation-skipping transfer tax Eliminated Eliminated Eliminated
Investment income 50% deduction on capital gains, dividends, and interest income, resulting in rates of 6%, 12.5% & 16.5%
  • Maximum rate of 20% on capital gains/dividends
  • Repeal Obamacare surtax
  • Tax carried interest as normal income
 

  • Retain current structure but repeal Obamacare surtax
  • Tax carried interest as normal income
Standard deduction/personal exemptions
  • Increased standard deduction of $12,000 for singles, $18,000 for singles with children, & $24,000 for couples filing jointly (indexed to inflation)
  • Eliminates personal exemptions
 

  • Increased standard deduction of $25,000/$50,000
  • Retains existing personal exemptions, but steepens curve on Personal Exemption Phaseout
 

  • Increased standard deduction of $15,000 for singles and $30,000 for married couples
  • Eliminates personal exemptions
  • Eliminates head-of-household filing status
Child tax credit
  • Consolidates CTC and dependent exemptions into $1,500 (first $1,000 refundable)
  • Non-refundable $500 credit for non-child dependents
  • Increases phase-out threshold for married couples from $110K to $150K
  • Requires SSN for refundable portion of credit
No information No information
Child and dependent care No information No information
  • Would create new above-the-line deduction for child/dependent care expenses, capped at state average for child (based on age) and at $5,000 for elder care;
  • Limited to 4 children per taxpayer up to age 12
  • Available up to incomes of $250,000/$500,000
  • Creates new tax-free Dependent Care Savings Accounts, allowing annual contributions up to $2,000  with 50% match on parental contributions up to $1,000
EITC Unspecified reforms No information Would provide additional rebate for parents not earning enough to benefit from child and dependent care deduction (incomes up to $31,200/$62,400) – equal to 7.65% of the “remaining eligible childcare expenses” with a cap of 1/2 the payroll taxes of the lower-earning parent
Higher education incentives Unspecified consolidation of existing programs like AOTC, 529 plans, etc. No information No information
Itemized deductions Eliminate all except Mortgage Interest Deduction and Charitable Contributions deduction (both with unspecified reforms to make them more “effective and efficient”) Increase phase-out of deductions (steepen curve of Pease limitation) on all except Mortgage Interest Deduction and Charitable Contributions Capped at $100,000/$200,000
Retirement savings incentives Unspecified consolidation/reform No information No information
Other No information Phase out exemption on life insurance interest for high-income earners No information
Pass-Through Entities/Sole Proprietorships
  • Top rate of 25%
  • Compensation to owner-operators deductible and taxed at individual rates
  • Full expensing allowed on tangible & intangible assets
15% rate Unclear whether pass-throughs would be eligible for 15% rate. Plan says that the rate would be “available to all businesses, both small and large, that want to retain the profits within the business” so may just apply to C corps, but pass-throughs may be able to elect to adopt a status similar to C corps.
Corporate Tax
Rate 20% rate 15% rate 15% rate
Corporate AMT Eliminated Eliminated Eliminated
Depreciation Full expensing allowed No information Manufacturing firms can elect full expensing in exchange for forgoing interest deduction
 Interest deduction No net interest deduction, but companies can deduct interest expense from interest income Subject to an unspecified cap See above
Net operating loss
  • Can be carried forward indefinitely, increased for inflation and return on capital
  • Deductions limited to 90% of net taxable amount per year
  • No carrybacks allowed
No information No information
QPAI Eliminated No information No specifics, but plan would eliminate “most corporate tax expenditures except R&E”
R&E Retained w/ unspecified reform No information Retained
Employer-subsidized child care No information No information
  • Increase cap on business tax credit for on-site childcare from $150,000 to $500,000 and reduce recapture period from 10 years to 5 years
  • Businesses’ contributions to employee childcare costs can be deducted from corporate income (employees could not receive tax benefits on the subsidies)
International
System Territorial End deferral No information
Cross-border     transactions Exports exempt from US tax, imports subject to US tax No information No information
Treatment of existing offshore profits One-time tax of 8.75% on cash and cash equivalents & 3.5% on other earnings payable over 8 years One-time tax of 10% One-time tax of 10%