In a press conference on Wednesday, Secretary of the Treasury Steven Mnuchin, along with White House National Economic Council Director Gary Cohn, unveiled the primary objectives for tax reform as envisioned by President Trump.
The discussion was titled Economic Growth and American Jobs.
A key element in the discussion was the need for simplification of the tax reporting system for most U.S. taxpayers. Citing various statistics demonstrating the high number of hours U.S. taxpayers expend in the preparation of their annual tax return filings, the president's individual tax reform proposals have been designed to allow many U.S. taxpayers to file their required yearly tax return on a single page. While this will not be possible for all, the changes being proposed to promote such simplification are:
Changes for Businesses
Business reform would center on a single 15 percent tax rate and repatriation of foreign earnings through the implementation of a one-time tax on earnings held overseas. The system of foreign taxation would also change to a territorial system, but no details were provided on the fate of the much-publicized border adjustment tax on imports.
When questioned about the benefits that a 15 percent business tax rate would provide the wealthiest of U.S. taxpayers, Mnuchin noted that measures would be provided to prevent the wealthy from unjustly benefitting from the ability to access the new rates by creating pass-through type entities.
Details on how and when the tax reform changes, which also include the repeal of the estate tax, would be made are still to come. But when asked how the changes would be paid for, Mnuchin said payment would come from the anticipated economic growth created through redeployment of the tax dollars saved.
Although no details were provided, the elimination of deductions for special interests and tax relief for families with children and dependents were also said to be important objectives of the president's tax reform proposals.
In the process of passing tax legislation, the first step has now been taken; the president has laid out his plan for tax reform. It will now depend on the action of the U.S. House of Representatives. All tax legislation must originate, and be passed, in the House before it can be sent to the U.S. Senate for action and approval.
While assurance was provided by Mnuchin that the Trump administration was in constant contact with the leadership of the House and Senate, the still-to-come details will rule the day and determine whether tax reform can be achieved as envisioned in the president's proposals, or will be modified as those proposals pass through Congress.
Additional information will follow as specifics are made available. Contact your Eide Bailly professional with any immediate questions or concerns.