Tax Cuts 2.0 Proposal Expected in September

President Trump’s new tax proposal is expected in September, just as voters are deliberating who to vote for this Fall. The White House is said to be constructing a $1 trillion tax cut package which may include a 10 percent tax cut for middle-income payers, as well as making some other cuts permanent. The legislation is likely to include new adjustments in the tax brackets, which the 2017 Tax Cuts and Jobs Act reduced, National Economic Council Director Larry Kudlow has proposed that Tax Cuts 2.0 include a 15 percent middle class earning rate.

Consideration is being given to allowing a portion of household income to be treated as tax-free for investing outside a traditional 401(k). Officials state that under this scenario, a household earning up to $200,000 could invest $10,000 of that income on a tax-free basis. Another proposal may seek to create universal savings accounts, known as USA accounts, which would combine and simplify all savings accounts that give tax breaks (retirement, education and health care savings) into one vehicle. Money put into the account would be done so on an after-tax basis, and taxed when withdrawn as well; however, any accumulation of profits during the investment timeframe (capital gains) would not be taxed.

Preliminary discussions are also occurring regarding a new minimum tax on corporations to offset the new middle-class tax cuts. This and the other proposals are all preliminary, however, the President is adamant about the new tax package being focused on middle income earners since the proposal will be a political messaging tool.

From PMAA