President-elect Trump, during his campaign, proposed a three-bracket tax plan with rates of 12, 25 and 33 percent. This mirrors the Hour GOP Tax Reform Blueprint released this past summer.
There is a chance this could be introduced into legislation early in 2017. Not likely that it would be retroactive for 2016, but remember the Tax Reform Act of 1986 was not passed until October of 2006, and was retroactive to January 1 of that year. Expect some resistance from the “Tea Party” Republicans who would insist that any tax cuts be paid for with a reduction in spending.
President-elect Trump has proposed a repeal of the Net Investment Income Tax, which is an additional 3.8 percent on investment income. The provision was part of the Affordable Care Act. A separate discussion on the Net Investment Income Tax is not likely and any repeal of the 3.8 percent tax would more likely come with a broader discussion of the Affordable Care Act (Obamacare) and would not happen quickly.
During the campaign, President- elect Trump proposed taxing carried interests as ordinary income. A carried interest is a share of the profits given to the general partner of a private equity or hedge fund for earnings of a “hurdle” rate. It is meant to give an incentive to the general partner to earn superior returns for the fund. Carried interests when paid out are currently taxed as long term capital gains. Opponents of this system argue that the carried interest is really a fee and should be taxed at ordinary rates. Look for some “back room” push back from Wall Street on this one.
Trump has proposed reducing the top corporate tax rate from 35 percent to 15 percent. Republicans have long argued that such a move would increase tax revenue because a lot of U.S. companies who moved to other countries because of the U.S. tax structure, would move back and thus increase the tax base.