Financial Focus: Can Donald Trump’s Income Tax Plan Save America? (Part 1)

Anthony RivieccioFinancial Focus: Can Donald Trump’s Income Tax Plan Save America? (Part 1)
by Anthony Rivieccio, MBA, PFA

 

As the leading GOP candidate for president, real estate developer and reality TV star Donald Trump must show how he would lead the nation, if elected. On income tax policy, Mr. Trump has stated that taxes should be “revenue neutral,” “common sense” and “liberal forward thinking.”

 

On Monday, Trump presented a four point plan for what he calls “Tax Simplification.”
Here’s what Trump proposed:

DonaldTrump (Large)1- Four Individual tax brackets instead of seven:
Right now there are seven federal income tax brackets. Trump would reduce it down to four.

A- Individuals who are single and earn less than $25,000 per year will not owe any federal income taxes.  Trump estimates that this will help 75 million households. He believes that most households will achieve savings of nearly $1,000 each.

B- Individuals making $25,001 to $50,000 (or couples making $50,001 to $100,000) would pay 10 percent in federal income taxes and keep most of their current exemptions and deductions. Those making more than $25,000 per year or $50,000 jointly would still get a tax break, which Trump estimates will total nearly $1,000 a year in savings for more than 31 million households.

C- Those making $50,001 to $150,000 (or couples making $100,001 to $300,000) would pay 20 percent and keep more than half of their current deductions.

D- The highest tax bracket would be 25 percent and apply to those making more than $150,001 per year, along with couples making more than $300,001. Those in the highest tax bracket would see most of their deductions disappear.

2- Cut the corporate tax rate to 15 percent:
Trump would slash the corporate tax rate for all companies — from mom-and-pop shops to massive Fortune 500 corporations — to 15 percent, which he said will stimulate the economy and make all of his proposed tax cuts feasible.

Donald Trump3- Trump promises to eliminate various penalties and deductions: Trump wants to get rid of the ‘marriage penalty,’ ‘death tax’ and alternative minimum tax, which he says unfairly hurt middle-class taxpayers. He also wants to reduce or eliminate most deductions and loopholes available to the very rich, along with corporate loopholes that cater to special interests. He would keep deductions for mortgage interest and charitable giving. Trump believes that there is a “huge amount of wasteful spending” in the federal budget.

4- Allow corporations to bring cash back to the U.S.:

Trump estimates that U.S. corporations are keeping as much as $2.5 trillion overseas. He wants them to bring that money back into the country and would offer a one-time incentive of a deeply discounted tax rate of 10 percent. After that, Trump would no longer allow corporations to defer taxes on income earned overseas, although he would keep the foreign tax credit.

In our next article, we will examine how these policies, if enacted, will effect our economy. Will Trump’s proposed tax plan help or hurt the middle class?  We will examine whether his plan helps to share the wealth of America or just make the rich richer by giving them MORE tax breaks?

Anthony Rivieccio is the founder & the CEO of The Financial Advisors Group, celebrating their 18th year as a fee only financial planning firm specializing in solving one’s financial problems. Anthony, a recognized financial expert since 1986, has been featured by many national and local media including: Klipingers Personal Finance, The New York Post, News12 The Bronx, Bloomberg News Radio, Bronxnet Channel 67 TV, The Norwood News, The West Side Manhattan Gazette, Labor Press Magazine, Financial Planning Magazine, WINS 1010 Radio, The Bronx News and The Bronx Chronicle.

For financial inquires or assistance, Anthony can be reached at (347) 575-5045 or advisorsgroup@ymail.com.

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