What You Should Know About Trump's Tax Reform Plan

For starters, your tax return form would definitely be shorter.
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What You Should Know About Trump's Tax Reform Plan

The Trump administration unveiled its tax reform plan Wednesday. Treasury Secretary Steven Mnuchin and President Trump's chief economic adviser Gary Cohn said they've found agreement within the House and Senate — at least when it comes to the plan's "core principles."

"Make business rates competitive, bring back trillions of dollars to create jobs, simplify personal taxes, create a middle-income tax cut. So those core principles are non-negotiable," Mnuchin said. 

The details of the plan are still being ironed out. But here's what we know.

When it comes to personal tax reform, the plan would cut the number of tax brackets by more than half. Instead of the seven brackets currently in place, there would only be three — a 10 percent, 25 percent and 35 percent.

"We're going to double the standard deduction so that a married couple won't pay any taxes on the first $24,000 of income they earn," Cohn said. 

Cohn said the plan would eliminate "most tax breaks" that benefit "high-income" earners. 

"Home ownerships, charitable giving and retirement savings will be protected. But other tax benefits will be eliminated," Cohn said. 

The plan would also repeal the alternative minimum tax and the estate tax — also known as the death tax. It would also repeal a 3.8 percent tax on investment income, which was included in the Affordable Care Act. 

"Under the Trump plan, we will have a massive tax cut for businesses and massive tax reform and simplification," Mnuchin said. 

The plan would cut the tax rate for businesses to 15 percent — and according to the White House, small- and medium-sized businesses would be eligible for that rate.

"Right now, we have a 35 percent corporate rate on worldwide income and deferral. It is perhaps the most complicated and uncompetitive business rate in the world. Not a surprise that companies leave trillions of dollars offshore," Mnuchin said.

It would also switch to a territorial tax system. Mnuchin said that means companies would no longer be taxed on worldwide income but just "income related to the U.S."

"We will have a one-time tax on overseas profits, which will bring back trillions of dollars that are offshore to be invested here in the United States to purchase capital and to create jobs," Mnuchin said.

Mnuchin said the plan would pay for itself through "growth" and closing loopholes, but he didn't offer details.