America has one of the worst tax codes in the industrialized world for businesses. By reducing tax rates for businesses large and small, our plan will level the playing field and make America the jobs magnet of the world.
Our tax code is too complicated. By throwing out special-interest loopholes and consolidating deductions, our plan will make filing taxes so easy that you can use a form as simple as a postcard.
Americans' taxes are too high, so we are going to cut taxes for those at all income levels and eliminate excessive, costly taxes like the Alternative Minimum Tax and the Death Tax. That means you get to keep more of your
What do you think Congress should do to create a fair and simple tax code?
what does our plan do?
Lowers Rates for Individuals and Families
The framework shrinks the current seven tax brackets into three – 12%, 25% and 35% – with the potential for an additional top rate for the highest-income taxpayers to ensure that the wealthy do not contribute a lower share of taxes paid than they do today.
Eliminates Loopholes for the Wealthy, Protects Bedrock Provisions for Middle Class
To provide simplicity and fairness the framework eliminates many itemized deductions that are primarily used by the wealthy, but retains tax incentives for home mortgage interest and charitable contributions, as well as tax incentives for work, higher education, and retirement security.
Creates a New Lower Tax Rate and Structure for Small Businesses
The framework limits the maximum tax rate for small and family-owned businesses to 25% - significantly lower than the top rate that these businesses pay today.
To Boost the Economy, Allows “Expensing” of Capital Investments
The framework allows, for at least five years, businesses to immediately write off (or “expense”) the cost of new investments, giving a much-needed lift to the economy.
Brings Profits Back Home
The framework brings home profits by imposing a one-time, low tax rate on wealth that has already accumulated overseas so there is no tax incentive to keeping the money offshore.
Doubles the Standard Deduction and Enhances the Child Tax Credit
The framework roughly doubles the standard deduction so that typical middle-class families will keep more of their paycheck. It also significantly increases the Child Tax Credit.
Repeals the Death Tax and Alternative Minimum Tax (AMT)
The framework repeals the unfair Death Tax and substantially simplifies the tax code by repealing the existing individual AMT, which requires taxpayers to do their taxes twice.
To Create Jobs and Promote Competitiveness, Lowers the Corporate Tax Rate
So that America can compete on level playing field, the framework reduces the corporate tax rate to 20% – below the 22.5% average of the industrialized world.
Moves to an American Model for Competitiveness
The framework ends the perverse incentive to offshore jobs and keep foreign profits overseas. It levels the playing field for American companies and workers.
What do you think about our tax reform plan?
why do we need tax reform?
In 1986, President Reagan signed into law the single largest reform of the U.S. tax code in our nation’s history. Now—more than 30 years later—we recognize that our current tax code is beyond repair, and it’s clear that simply tinkering with our broken tax code won’t fix these problems.
But don't take our word for it. Here are 31 reasons why we need tax reform.
Our broken tax code is a drag on our economy
Our broken tax code has helped cement the slow-growth status quo of sub-2 percent economic growth. But if- as a result of tax reform - the US economy averages 3 percent growth in the next 10 years, we’d see millions of jobs created and income for a family of four would be thousands of dollars higher.
Americans spend too much money filing taxes
The burdens and complexities of our broken tax code come at a real cost to the American people. Independent estimates show that taxpayers spend a combined $99 BILLION each year complying with the individual income tax - money Americans could otherwise use on what is important to them and their families.
Americans at every income level deserve to keep more of their paychecks
Every hard-earned dollar Americans can keep from their paychecks and put towards their own American Dream is a dollar that grows our economy. That’s why Republicans are proposing to reduce taxes for all Americans at all income levels.
frequently asked questions...
Q1. Will this just be a tax break for the wealthy?
No. The framework is focused squarely on helping middle class families. The goal is a simple and fair tax system that allows low- and middle-income workers to keep more of their hard-earned paychecks.
The framework is clear that the tax code will remain at least as progressive as it is today and will not shift the tax burden from high-income to lower or middle-income families.
It nearly doubles the standard deduction so the first $12,000 earned by an individual and $24,000 earned by a married couple is completely tax-free. The framework also lowers tax rates and significantly increases the child tax credit and creates a new $500 tax credit for families caring for non-child dependents.
And by also lowering tax rates on businesses of all sizes, middle class Americans will enjoy more jobs, fairer taxes, and bigger paychecks.
Q2. With the change in tax brackets, are you raising taxes on low income Americans?
No. We’re significantly lowering taxes for low- and middle-income Americans.
The framework reduces today’s 15% bracket to 12%, and the current 10% bracket becomes 0%.
Additionally, we DOUBLE the standard deduction, which means low- and middle-income Americans will see twice the amount of their paychecks protected from taxes. More of their income – $12,000 for single filers and $24,000 for married couples – will be in the “zero tax bracket.”
Q3. What's wrong with our current tax code?
In 1986, President Reagan signed into law the single largest reform of the U.S. tax code in our nation’s history. Now—more than 30 years later—Americans recognize that our current tax code is beyond repair.
Because today's tax code:
Discourages job creation by taking too much from our job creators—money they could otherwise use to hire more workers and grow their businesses.
Drives American jobs, research, and headquarters overseas to countries with more competitive tax codes. The Tax Foundation ranks the United States 31 out of 35 OECD member nations on its competitiveness scale.
Imposes punishingly high taxes on hardworking American families. In fact, 65% of Americans believe federal taxes are too high.
Puts U.S. workers at a worldwide tax disadvantage versus our global competitors. With the highest corporate rate in the modern world and an outdated international tax system, it is more difficult for American businesses to succeed globally and to create jobs here at home.
Destroys opportunities for Americans by favoring foreign workers and products over American workers and products.
Holds back productivity and wage growth by discouraging businesses from investing in American workers and communities.
Contains a maze of special-interest loopholes and deductions that are unfair to hardworking Americans. These loopholes keep rates artificially high for some while giving tax breaks to others.
Encourages businesses to make decisions based on tax breaks instead of what is best for their workers and customers.
Burdens families and job creators with excessive paperwork and compliance costs, creating unnecessary frustration each tax season.
These are just a few of the many reasons why we need tax reform. See 31 other reasons here. It’s clear that simply tinkering with our broken tax code won’t fix these problems. Today, we have a once-in-a-generation opportunity to move forward with bold, pro-growth tax reform to create jobs, grow wages, and vault America back into the lead.
Q4. Will your framework explode the deficit?
Our goal is to make tax reform as permanent as possible so businesses can plan for the future and make long-term investments in our economy.
To deliver that permanence, we’re committed to tax reform that balances within the budget, accurately accounting for the revenue generated by a strong and growing American economy.
Q5. By doubling the standard deduction in your framework, the vast majority of Americans will no longer have to itemize deductions on their tax returns. Won’t that essentially eliminate the charitable deduction and mortgage interest deduction and, as a result, discourage charitable giving and homeownership?
No. Our unified framework clearly says we are protecting tax benefits for charitable giving and mortgage interest.
And by promoting a stronger American economy – which is by far the biggest driver of charitable giving and a strong housing market – our proposal will grow Americans’ paychecks, helping them buy a home and give back to the community.
Q6. Does your framework just benefit big business and large corporations?
This framework delivers tax relief to middle class Americans.
We also drastically lower tax rates for Main Street job creators to no more than 25% instead of rates that can be higher that 40% – and that will help create jobs in every community across our country.
Q7. Will your lower tax rate for pass-through businesses be a massive loophole the wealthy can use to avoid paying their fair share of taxes?
No. This new, lower rate for Main Street job creators is key to delivering more jobs, fairer taxes, and bigger paychecks.
As tax reform moves forward, Republicans will develop strong measures to make sure this much-needed tax relief goes to the local job creators it is designed to help.
Q8. Is repealing the Death Tax just a massive giveaway for the super wealthy?
Hard-working Americans pay taxes all their lives on the money they earn, the food they buy, the gas they put in their car. It isn’t fair or right that they pay a double tax when passing on what they built to their children.
The Death Tax, an unfair double tax, impacts family-owned businesses and farms throughout the nation, burdening those who have worked their entire life to build a successful company and create jobs. These families should not have to fear double taxation from Washington when they pass down their life’s work to the next generation. This fact is acknowledged by many democrats like Sens. Ron Wyden, Bill Nelson, Joe Manchin, Dianne Feinstein, and Patty Murray who’ve voted to repeal it.
One recent survey shows that the death tax is the third biggest concern cited by family-owned business, following income taxes and regulations. According to the same survey, 21% of business owners said they would have added more jobs if they did not have to set aside assets to pay the death tax.
In 2016, they incurred an average of $74,940 in insurance for estate taxes, an average of $170,800 in other estate tax planning costs and an average of 13% of their time was spent planning for estate taxes.
Q9. Are you excluding Democrats from this process by using reconciliation?
Republicans welcome Democrat support – after all, Americans in every corner of the country need more jobs and larger paychecks. We will certainly work with members on both sides of the aisle who are serious about delivering pro-growth tax reform that helps hard working middle class Americans.
Furthermore, nothing says reconciliation has to be partisan, and it has historically been a bipartisan process. In fact, the so-called Bush Tax Cuts of 2001 and 2003 were passed through reconciliation and both Republicans and Democrats voted in favor of them, and in 1997, President Clinton and a GOP Congress used it to pass bipartisan budget and tax bills.
Q10. Your framework doesn’t mention the deduction for state and local taxes. Won't eliminating that tax relief hurt millions of American families?
Republicans are currently filling in many policy details when it comes to itemized deductions, but our framework is clear – we’re dedicated to helping middle class families.
That’s why we’re lowering middle class tax rates, doubling the standard deduction, and preserving tax benefits to help families buy a home, raise children, and send their kids to college.
Americans are sick of the maze of special provisions that benefit some people at the expense of everyone else. It’s time to make this tax code simpler and fairer so middle class families can keep more of their paychecks to spend, save, and invest as they see fit.
Q11. Mailing in your taxes on a postcard can’t be secure. Is this how you expect us to file our taxes?
Our framework will deliver bold tax reform where the form is “as simple as” a post card.
Under our new, simplified tax system, Americans will always have a secure way to file their taxes.