Politics

President Trump Gives Details On Anticipated Tax Reform

| by Michael Howard

President Donald Trump reinforced his plans to cut taxes for Americans at every income level, indicating that he would like to reduce the number of tax brackets "from seven to three or four" and also that he wants a 0 percent tax rate for people below a certain income.

The comments came during a March 18 interview with Fox News' Jesse Watters.

Previously, Trump had called for a reduction to three tax brackets down to 12 percent, 25 percent and 33 percent, which coincides with the tax reform blueprint laid out by Republicans in the House of Representatives, according to CNN.

"I'd like to see 0 [percent] if you don't make much, like 0," Trump said during the interview. "That's what it's going to be, it's going to be 0 up to a level."

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But the standard deduction already has the effect of providing a 0 percent rate, given that it reduces a single person's gross income by $6,300 and a married couple's by $12,600. People whose incomes do not exceed these numbers effectively pay 0 percent in taxes.

"Having both [a 0 percent bracket and a standard deduction] wouldn't make much sense," Roberton Williams, a senior fellow at the Tax Policy Center, told CNN.

Trump and House Republicans have both proposed a higher standard deduction. The GOP blueprint would almost double it, while Trump wants it increased to $15,000 for singles and $30,000 for married couples filing jointly.

The president then gave a rough idea as to what the rate might be for those above the proposed 0 percent bracket.

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"Then it's going to be 12.5 percent, 15 percent, it's going to be 10 percent," he said. "We're working on the different numbers."

Speaking to CNBC on March 14, UBS managing director and CIO of short-term investment opportunities Vinay Pande indicated that Trump's anticipated corporate tax cuts -- which he has yet to provide details on -- could have a significant impact on the stock market.

"I think that there are clear signs that this administration is looking to cut corporate taxes, if not this year, then later in the year, or early next year," Pande said. "Bottom up analysts have not forecasted any gains from tax cuts. And those gains could be substantial, whether they're this year or early next year.

"Every 5 percentage points net cut in the corporate tax rate translates into 4 percentage point increases in earnings per share growth," he added. "These are very big numbers, gigantic numbers."

Sources: CNN, CNBC / Photo credit: Gage Skidmore/Flickr

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