Donald Trump on Tax Reform

Donald Trump signed the Tax Cuts and Jobs Act. It cuts individual income tax rates, doubles the standard deduction, and eliminates personal exemptions. The top individual tax rate drops to 37%.Donald Trump signed the Tax Cuts and Jobs Act. It cuts individual income tax rates, doubles the standard deduction, and eliminates personal exemptions. The top individual tax rate drops to 37%. The Act cut the corporate tax rate from 35% to 21% beginning in 2018. The corporate cuts are permanent, while the individual changes expire at the end of 2025. The Act lowers tax rates but keeps the seven income tax brackets. These rates revert in 2026. The Act created the following chart. The highest tax bracket is $500,000 for single people and $600,000 for married couples. Beginning in 2018, they pay a 37% rate after exemptions and deductions. That's lower than the 2017 rate of 39.6%. Trump's tax plan advocates a change from the current "worldwide" tax system to a "territorial" system. Under the worldwide system, multinationals are taxed on foreign income earned. They don't pay the tax until they bring the profits home. As a result, many corporations leave it parked overseas. Under the territorial system, they aren't taxed on that foreign profit. They would be more likely to reinvest it in the United States. This will benefit pharmaceutical and high tech companies the most.
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