White House Unveils Tax Plan
On Wednesday, April 26th, the White House unveiled its tax plan in a press briefing introduced by Sean Spicer and conducted primarily by Treasury Secretary Steven Mnuchin and the Director of the National Economic Council Gary Cohn. In conjunction with the briefing, the White House released a one-page document entitled 2017 Tax Reform for Economic Growth and American Jobs, which summarized the major goals for reform, for both individual and business taxpayers.
Director Cohn revealed the individual reform provisions overview, while the Secretary Mnuchin gave an overview of the business reforms. During their prepared remarks and the Q&A that followed both individuals emphasized several times that the details of the tax reform plan are being worked on with Congress, and those details would be revealed when legislation is agreed upon.
The highlights of the individual taxpayer reforms based on prepared remarks and the Q&A include the following:
- Individual income tax brackets will be 10%, 25% and 35%.
- The standard deduction will be doubled, meaning fewer individuals will itemize, thereby simplifying the filing process.
- Tax relief will be provided for families with child and dependent care expenses.
- Most deductions and credits available to individuals, including the state income tax deduction, will be eliminated. The deductions for home ownership (home mortgage interest specifically), charitable gifts and retirement savings will be protected.
- The alternative minimum tax will be repealed.
- The “death tax” (estate tax) will be repealed.
- The 3.8% net investment income tax will be repealed
- Capital gains and dividends will be taxed at 20%; no details on any limitations such as long-term capital- no other details
The highlights of the business taxpayer reforms based on prepared remarks and the Q&A include the following:
- Business income tax rate will be 15%, including small, medium, and large business. The Q&A indicated that rules will be in place so that individuals are unable to create pass-through entities to avoid paying the tax rate that should be at the individual level; no further explanation was given.
- Tax breaks for special interests will be eliminated.
- A one-time tax (rate and other details to be determined) will apply to repatriated foreign source income.
- A territorial tax system, in which US businesses are taxed on US income and not on world-wide income, will be established.
- As always, we will continue to monitor developments and keep you informed. We are facing some potentially very significant changes in our tax regimen, which will make communication and planning even more important as the year and any tax developments unfold.
Additionally, we invite you to please join us in Birmingham, Auburn and Huntsville for a nonpartisan discussion of The First 100 Days of the Trump Administration and the potential implications for the next four years and beyond.
The seminar will feature Leigh Hixon,Senior Director of Policy with the Alabama Policy Institute, as our key note speaker and panel discussion featuring key thought leaders in each local community to weigh in and break down the administration’s biggest decisions to date.
There is no cost to attend the event and 3 hours of CPE will be available for all attendees:
• Tuesday, May 2nd – Birmingham
o Steve Smith of Barfield, Murphy, Shank & Smith
o Greg Curran of Maynard Cooper
o Duke Hinds of Regions Bank
• Wednesday, May 3rd – Auburn
o Hal Huguley of Barfield, Murphy, Shank & Smith
o Rick Davidson of Davidson, Davidson & Umbach
o Boles Pegues of River Bank
• Tuesday, May 9th – Huntsville
o Cynthia Hudson of Barfield, Murphy, Shank & Smith
o Kevin Gray of Bradley
o Thomas Busby of National Bank of Commerce