Here’s What You Need to Know About Trump’s Tax Overhaul

The tax code hasn’t been overhauled since the Reagan administration, but tax reform is set to be one of the biggest issues on Capitol Hill this summer with President Donald Trump hoping to tackle it as a legacy issue. His new plan is ambitious and lawmakers on Capitol Hill will have the final say, but the White House says it’s a top priority. “We want to move as fast as we can,” Treasury Secretary Steven Mnuchin told reporters. “This bill is about creating economic growth and jobs.”

Here’s what you need to know about the sweeping proposal:

• The tax plan would bring the number of income brackets to three from the current seven brackets.
• It would lop the corporate tax rate by a whopping 20 percent – bringing it to 15 percent down from where it currently rests, at 35 percent.
• The proposal calls for doing away with most of the categories that taxpayers are allowed to deduct from, though it keeps in place deductions for charitable contributions and mortgage interest.
• The plan calls for bringing the trillions of dollars held by U.S. companies overseas back onto U.S. soil, but the onetime tax rate on those funds has yet to be determined. Congressional negotiations with the White House are ongoing.
• The proposal eliminates the estate – or “death” –tax, which only applies to the wealthiest Americans.
• The tax plan also kills the alternative minimum tax and does away with a 3.8 percent Obamacare tax.

Democrats are using the plan to highlight the fact Trump has refused to release his tax returns, and many say they can’t support a tax overhaul that could mean a windfall for the First Family. “I think it’s a problem to do tax reform where we aren’t sure, is this about policy or how much does this pad the president’s pocket?” Sen. Tim Kaine (D-Vir.) told Countable. “We don’t have the tax returns to make that judgment, so I think that will be an important thing for us to know too.”

Republicans control both chambers of Congress, which makes it possible for them to pass the tax overhaul without Democratic input by using a process called budget reconciliation. That would enable them to pass it with a simple majority of 51 votes, instead of the filibuster proof 60 vote threshold that would require Democratic support. “There’s two ways to do it. 60 or 50 – I’d prefer 60, I’d tie the tax bill to the infrastructure bill, but that’s just me,” Sen. Lindsey Graham (R-SC) told Countable.

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- Matt Laslo

(Photo Credit: Secretary of Defense via Flickr / Creative Commons)