The following article by Wilson Andrews, Kenan Davis, Adam Pearce and Nadja Popovich was posted on the New York Times website April 26, 2017:
President Trump’s proposed changes to the tax code could increase the deficit by an estimated $3 trillion to $7 trillion over the next decade, according to the Committee for a Responsible Federal Budget, an advocacy group focused on reducing deficits.
The one-sheet plan, released Wednesday, was light on details but promised to be “the biggest tax cut and the largest tax reform in the history of our country.” Here’s a breakdown of the estimated cost for specific changes proposed in the White House’s plan.
Increases the Deficit
| Simplify tax brackets | +$1.5 trillion |
| The plan moves from seven tax brackets for individuals to three — 10 percent, 25 percent and 35 percent — and lowers the top rate. | |
| Repeal the Alternative Minimum Tax | +$0.4 trillion |
| The Alternative Minimum Tax limits the deductions wealthy people can take. | |
| Double the standard deduction | +$1.5 trillion |
| The standard deduction currently allows individuals to deduct $6,350 and married couples to deduct $12,700 from their taxable income. The new plan would double that. | |
| Repeal the inheritance tax | +$0.2 trillion |
| Taxes are currently levied on estates worth more than $5.5 million when the estate is passed from a deceased person to his or her heirs. | |
| Reduce the corporate tax rate | +$3.7 trillion |
| Mr. Trump’s plan cuts the corporate tax rate to 15 percent from 35 percent. The Committee for a Responsible Federal Budget estimated that this would directly reduce revenue by $2.2 trillion. The deficit could increase a further $1.5 trillion because the change would encourage individuals to use creative accounting to take advantage of the lower corporate tax rate, it says. | |
| Repeal the tax on investment income | +$0.2 trillion |
| This plan would eliminate a 3.8 percent tax on investment income that helps fund the Affordable Care Act. | |
| Expand child care benefits | Unknown |
| The Trump administration is considering increasing tax credits for child care. |
Decreases the Deficit or No Impact
| Repeal most deductions except for mortgages and charitable giving | –$2.0 trillion |
| Administration officials said they will get rid of all deductions except the mortgage and charitable deductions. That could raise up to $4.5 trillion. Just capping deductions, as Mr. Trump proposed during his campaign, would raise $500 billion. | |
| One-time tax on overseas profits | $0 |
| A one-time tax on money currently held by companies overseas would be accompanied by a new method of taxing companies only on income generated in the United States. | |
| Repeal other tax preferences | Unknown |
| The Committee for a Responsible Federal Budget did not try to estimate the effect of the “Eliminate tax breaks for special interests” proposal. |
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