Trump's tax outline lowers business tax rate and kills AMT, but offers few details

Looking to cap his first 100 days in office with a major policy proposal, President Donald Trump unveiled a broad tax policy outline that would keep a campaign promise to reduce the business tax rate by more than half and get rid of a contentious income tax altogether.

On April 26, the Trump administration announced a plan that would lower the rate from 35 percent to 15 percent. His plan included getting rid of the alternative minimum tax, or AMT. Trump had pledged to do both in his tax plan, which has been taken down from Trump's site but is archived here.

The change to the business tax rate would affect not just big corporations, but every company that pays taxes through the personal income tax code, including small family-owned businesses.

"We have a once in a generation opportunity to do something big and important on taxes," White House National Economic Council Director Gary Cohn said at the plan's official unveiling.

Trump's lowered rate changes also affect businesses known as pass-through entities, so-called because their profits currently "pass through" the business and instead are taxed as their owner's ordinary income.

These business currently pay taxes at individual rates, which top off at 39.6 percent.

They include partnerships like law firms and investor groups, sole proprietorships, limited liability corporations (LLCs) and corporations with less than 100 shareholders. It also would include Trump's own real estate business.

The plan also raises the standard individual deduction, doubles the deduction for couples and proposes lowering the repatriation tax on offshore earnings from 35 percent to 10 percent.

Income tax brackets for individual filers would be collapsed from seven to three, at tiers of 10 percent, 25 percent and 35 percent, based on an earner's income.

Along with the AMT, Trump suggests eliminating the estate tax, both of which bring in billions of dollars per year. The AMT alone was projected to bring in about $35 billion in 2017, according to the Tax Policy Center. That amounts to about 2.2 percent of all individual income tax revenue.

The outline, which lacks several details, did not include Trump's proposed $1 trillion infrastructure package, or a border adjustment tax favored by some House Republicans. It also doesn't address loopholes or raising other taxes to make up for shortfalls.

It does suggest ending most tax deductions to offset the costs of so much tax cutting. Deductions for home ownership, retirement savings and charitable giving would remain.

Such a steep cut in the corporate tax rate would have a major effect on the federal budget. A Tax Foundation analysis of a 15 percent corporate tax rate would cut government tax revenue by $2 trillion over 10 years, or 5 percent of total revenue.

The economy would have to grow by an average of 2.8 percent a year to make up the difference, the Tax Foundation analysis said. The Congressional Budget Office recently predicted average annual growth of 1.9 percent over the next decade.

"That's the unknown right now, is whether there is some sort of pay-for for any of this," Stephen Moore, a Heritage Foundation economist who helped Trump create the proposal, told the New York Times.

Trump promised to lower the corporate tax rate and eliminate the alternative minimum tax, and his new tax plan includes both proposals. We rate this promise In The Works.