On Wednesday, President Trump proposed an ambitious new tax plan. The plan would essentially overhaul the tax system, and here are a few key components from the proposal that everyone should know about.
1. The proposal of a territorial tax system and cutting of corporate tax.
This would essentially protect "offshore corporate income from U.S. taxation." It would be a big win for corporate America. In another win for big business, the plan proposes to lower the corporate tax rate from 35% to 15%, which would reduce revenues by $2 trillion over 10 years. It's not yet clear how the loss of $2 trillion would be compensated for.
2. The standard deduction will be doubled.
Right now, individuals can deduct $6,350 from their taxable income and married couples can deduct $12,700. Trump's new plan would double that deduction — a plan imposed essentially to give more money to the tax payers.
3. There would be three tax brackets, not seven.
Right now there are seven tax brackets, but the Trump plan will whittle that down to three; 10%, 25%, and 35%.
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4. Goodbye to the Alternative Minimum Tax (the AMT).
This is a tax loophole for the rich and it's incredibly hard to game. By getting rid of it, the rich will pay far less taxes.
5. The Inheritance Tax will be repealed.
Team Trump says the inheritance tax is a hardship for farmers and small businesses, while critics of Trump's say it's a hardship for the wealthy. Either way, his new plan gets rid of it.
You can read more about the tax plan here.