November 15, 2016

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

report

Read the Chart in PDF

 

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%

 



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