House GOP Tax Plan Explained

 

The House GOP released an outline of its eagerly anticipated tax plan Thursday morning. The talking points offer a good overview of what the House GOP considers important and where they may break from President Trump’s previously announced plan. 

 

Here are some of the highlights. 

 

Three Income Tax Brackets for Most Americans, with One Caveat. Similar to the President’s plan, this proposal would create three main income tax brackets (there are currently seven) at 12 percent, 25 percent and 35 percent. However, it breaks from the President by acknowledging the need to maintain a fourth bracket for the highest earners, so it would leave the current top 39.6 percent bracket in place as well.

 

Repeal the Alternative Minimum Tax. This has long been an unpopular tax. For most Americans it’s a frustrating bookkeeping inconvenience, but for the wealthiest sect it’s a major thorn in their sides. It disallows many common big ticket deductions among the richest Americans and those with complicated businesses, such as incentive stock options and depletion and accelerated depreciation on certain leased personal or real property. For instance, this tax alone cost President Trump some $31 million on his 2005 return (suffice it to say, he isn’t a fan).

 

Corporate Tax Rate Lowered to 20 Percent. This is a big one and is in lockstep with the President’s plan. The current rate is 35 percent, so this would be "the largest reduction in the U.S. corporate tax rate in our nation’s history,” according to the talking points.

 

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