GOP Tax Plan to Cut Rates on Businesses, Many Individuals--Update

By Richard Rubin Features Dow Jones Newswires

A sweeping Republican plan to overhaul the U.S. tax code proposes to sharply reduce tax rates on businesses and many individuals -- kicking off an effort by President Donald Trump and congressional leaders to build momentum for a challenging legislative push in the months ahead.

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The plan, which was obtained by The Wall Street Journal, calls for a 20% corporate tax rate, down from the current 35%. Other businesses, which pay their tax bills through their owners' individual tax returns, would get a 25% top rate with unspecified rules that would prevent some wealthy business owners from paying that rate on what's considered wage income.

The individual tax rates would be set at 12%, 25% and 35%, with the option of a fourth higher rate on the highest-income households, collapsing the individual tax structure from seven brackets to three or four. The plan would repeal the estate tax and provide a one-time tax on U.S. companies' stockpiled foreign earnings.

The framework, obtained in advance of its official release later Wednesday, is designed to make the tax system simpler by repealing the alternative minimum tax and expanding the standard deduction to $12,000 for individuals and $24,000 for married couples. The child tax credit would also be increased.

The framework, still light on some critical details, left it difficult for taxpayers to calculate exactly how they would fare under the new plan. It does call for limits on corporations' ability to deduct interest and also includes a repeal of the state and local tax deduction.

Plenty of work remains as Republicans try to turn their ideas into law over the next few months. Republicans have narrow margins in Congress, and interest groups that lose cherished tax breaks are already fighting back.

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(END) Dow Jones Newswires

September 27, 2017 10:59 ET (14:59 GMT)