On Wednesday Republican congressional leaders unveiled the outlines of their much-anticipated tax reform plan, and President Trump touted its virtues.
While short on details, the plan’s key provisions are:
- Reduce the statutory corporate tax rate to 20%, from 35%.
- Cut the number of individual tax brackets from seven to three–12%, 25%, and 35%– and maybe include another one for higher-income taxpayers.
- Eliminate the estate tax and alternative minimum tax, a potential windfall for big earners.
- Double the standard deduction and eliminate certain deductions, especially deductions for state and local taxes.
Some Republicans were quick to say the tax cuts would “pay for themselves” through faster economic growth, but nobody except a few supply-side fanatics believes that anymore. The nonpartisan Tax Policy Center estimated the plan would cost the Treasury $2.4 trillion over the next decade. “All income groups would see their average taxes fall,” the group declared, “but…those with the highest incomes would receive the biggest tax cuts.”
Well, surprise, surprise. And now that investors have a clearer idea of what they’ll be getting after waiting so long, what will they do?