Trump's plan would end the US practice of taxing the foreign profits of USA -based corporations. By eliminating the estate tax he could transfer that wealth to his children without paying any taxes on it.
Trump met Tuesday with a bipartisan group of House Ways and Means Committee members.
Some good news for Trump's friends in the business world: the corporate tax rate will be lowered almost 15 points, from 35 percent to 20 percent. What we don't know, however, is which incomes will fall into each tax bracket.
Reports have said the plan calls for lowering the top bracket for individuals to 35% from what is now 39.6%. But the rate cuts for businesses and individuals are sure to add to the nation's mounting debt.
The president said on his trip to Florida last week that he wants to cut taxes for the middle class and that "the wealthy Americans are not my priority".
The highlights of the plan include the following: Doubling the individual and family standard deduction so more income is in effect tax-free; decreasing tax brackets from seven to three, and setting the tax rates for those brackets at at 12, 25, and 35 percent. But typical families in the 10% bracket today "are expected to be better off" when all the changes under reform are considered together, the blueprint says. That's because the proposal also almost doubles the standard deduction and increases the child tax credit. That amounts to almost double the "benefit" they would receive by a doubled standard deduction.
In another pro-family move, the proposal also calls for a new $500 credit for non-child dependents, such as grandparents and disabled adults.
Households making more than $100,000 benefit the most. Most itemized deductions, including those widely used for state and local tax expenses, would also be eliminated. It will also eliminate the marriage penalty in the existing credit.
The President said his tax cut proposal wouldn't help the country's wealthiest taxpayers - including himself - but suggested it would bolster his legacy instead.
But the tax cuts still represent a bigger win for companies than some skeptical executives had anticipated. There's even a provision that would allow for a surcharge on the wealthy, which the administration hopes will bring some Democratic lawmakers around to supporting the plan.
Kill the estate tax: What Republicans refer to as the "death tax" only affects about 0.2% of all estates - and only those worth more than $5.5 million. It will put a finer point on an earlier statement from the group of congressional leaders and Trump administration officials, which called for cutting tax rates "as much as possible" but didn't include proposed numbers. It's estimated to cost roughly $1.5 trillion over a decade.
Capping taxes on small businesses at 25 percent. He wants to see that money come back to the U.S.so that it can be invested here.
A territorial system taxes companies only on the profits they earn within the country in which they are based.
A one-time tax on accumulated offshore earnings, which would be taxed at two unspecified rates: One rate for cash and cash equivalents and a lower rate for other assets.
"We have to acknowledge that any effort to cut or reform taxes is inevitably more complicated than tackling health care", said Mark Hamrick, senior economic analyst at Bankrate.com, in an email.