The White House on Wednesday issued President Donald Trump’s goals and key features for tax reform, including slashed corporate tax rates, flattened individual marginal income tax brackets, and repeal of the estate and alternative minimum taxes.

Trump outlined his proposals in a one-page sheet of bullet points headed “2017 Tax Reform for Economic Growth and American Jobs” and “The Biggest Individual and Business Tax Cut in American History.”

Speaking to reporters at the White House, Treasury Secretary Steven Mnuchin and Trump economic adviser Gary Cohn described the president’s priorities, but repeatedly rebuffed requests for details, saying those would be hammered out in negotiations with congressional leaders in the months ahead. Most of the policies hewed to those Trump put forth last fall on the campaign trail, most prominently, cutting the corporate income tax rate from its current 35% to 15% and extending it to passthrough entities, i.e., S corporations, partnerships, and entities taxed as partnerships.

Individuals

For individuals, Trump would replace the current seven graduated tiers of marginal rates (10%, 15%, 25%, 28%, 33%, 35%, and 39.6%) with three: 10%, 25%, and 35%—slightly broader than the 12%, 25%, and 33% he proposed last fall. Mnuchin and Cohn declined to say at what income levels those rates would apply. Trump also reiterated his call for repeal of the net investment income tax of 3.8% imposed on unearned income and gains of high-income taxpayers by the 2010 Patient Protection and Affordable Care Act, P.L. 111-148.

The proposal would double the standard deduction; however, it would limit itemized deductions to mortgage interest and charitable contributions. It would provide “tax relief for families with child and dependent care expenses,” but neither the document nor the officials said how that might differ from the current tax credit for child and dependent care expenses available under Sec. 21.

Trump had also previously proposed repealing the alternative minimum and estate taxes. The latter currently applies only to estates larger than $5.49 million per individual. As he has previously, Trump called for ending “tax breaks that mainly benefit the wealthiest taxpayers,” but did not provide details or examples. The proposal did not specifically address the tax treatment of carried interests, which are currently taxed at capital gain tax rates. Trump, along with many Democrats, has said in the past he favors curtailing this treatment.

Businesses

For businesses, besides lowering the top tax rate to 15%, the proposal calls for a territorial system of taxation, which generally would exclude from taxation foreign earned income. It also would impose a “one-time tax” on corporate earnings realized and held overseas and on which tax is deferred, possibly the same as, or consistent with, a deemed repatriation tax that Trump has previously proposed at a 10% rate.

Absent from the proposal was any mention of a border-adjustment, or destination-based cash flow, tax, which has been a key feature of the congressional Republican “blueprint” for tax reform and that Trump has discussed as a possibility previously. The proposal, however, has been widely criticized as problematic for U.S. importers and others and likely to be challenged internationally under World Trade Organization rules.

The plan does not specifically mention passthrough entities, but when he was a candidate, Trump’s tax plan included a provision that would allow owners of passthrough entities to be taxed at the proposed 15% business rate. When asked if this would provide an incentive for individuals to form passthrough entities to avoid the higher individual tax rates, Mnuchin answered that “we will make sure that there are rules in place to make sure wealthy people can’t create passthroughs” to lower their taxes.

Mnuchin said the administration would like to “move as fast as we can and get this done this year.” Congressional leaders have expressed reservations about aspects of the proposal, notably, the depth of the cuts without specifically identified revenue offsets and prospects for their passage at the intersection of budget and procedural rules. Trump said during the presidential campaign that his plan would be revenue-neutral; it would have to be, or the cuts would have to be temporary (typically ending within a 10-year budget window), for it to advance under the reconciliation process, by which the Senate can bypass a filibuster and pass the legislation with a bare majority instead of 60 votes. Mnuchin said the proposal would “pay for itself, with economic growth and with reduction of different deductions and closing loopholes.”

—Paul Bonner (Paul.Bonner@aicpa-cima.com) is a Tax Adviser senior editor.