Trump's tax plan could cost an estimated $5.5 trillion

The Internal Revenue Service building in Washington

The Internal Revenue Service building in Washington

On the flip side, Trump wants to eliminate the deduction for state and local taxes, a big tax break that benefits millions, especially people living in Democratic-controlled states with high local taxes such as New York, New Jersey and California.

Small and medium-sized businesses would be eligible for the business rate, like their larger counterparts, Mnuchin added.

"President Trump has listened to those who feel they work harder today for less or are out of a job", said NAM president and CEO Jay Timmons. In fact, in a paper on their work, they concluded that the "primary effect" of the centerpiece of those tax cuts - the income tax exemption granted to more than 330,000 business owners and farmers - was "tax avoidance", not economic growth.

Pass-throughs are not taxed under the corporate code. Numerous remaining 30% who itemize, largely higher income households, would likely switch to the standard reduction, leaving only about 5% itemizing, he says. "This is about getting the most sweeping tax cuts and tax reform passed by this president to create economic growth". The White House plan would eliminate the estate tax, which mainly affects the top 10 percent of income earners. But Treasury Secretary Steven Mnuchin stated categorically on Wednesday that the president has "no intention" of releasing them. But the plan is similar in outline to Trump's campaign proposal, which would have given almost half its benefits to the wealthiest 1 percent of Americans, while middle-income households would have received barely 7 percent of the cuts. "If you look at the ways this is going to benefit middle-class Americans, middle-income working Americans, and that is the concern of most Americans out there". "It could likely marginalize the mortgage interest deduction".

Although calls for a more simplified tax code have emerged from many quarters, AOL Inc. founder Steve Case says there's a need for nuance.

Veronique de Rugy, senior research fellow at the Mercatuss Center at George Mason University, says the elimination of millions of people from the tax rolls would mean a big decline in federal revenue. "The reality is, there are three very different sectors". But plenty of ginormous companies get taxed this way, including hedge funds, big law firms, publicly traded partnerships and even - coincidentally? - the Trump Organization. It has evolved over the years and now impacts about 5 million households, a lot of them making between $200,000 and $1 million a year.

Of course any savings Trump would enjoy under his own proposals could be undercut, depending on what tax breaks the administration would support curtailing. However, startups are heavily concentrated in a few places. No other state except NY had a higher proportion of income deducted due to state taxes. To spread the wealth, he prescribes targeted tax breaks for startups outside those states.

WASHINGTON, D.C. -Historic, bold tax reform is what Texans have waited years for and today they have a White House, the House and the Senate all moving in the same direction.

During the campaign, Trump released a tax proposal that would eliminate the personal exemption. That's the profit that accrues to the principals in private equity, venture capital, and hedge funds, which is now taxed at only 20 percent.

Trump's proposal, a one-page outline short on detail, says he would double the standard tax deduction, which could provide significant relief to working-class families.

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