McMahon attempted to analyze, based on the limited details available, what the changes could mean to a typical NY middle-class family, and he found that even with the loss of the state and local tax deductions, many would save a small to moderate amount of money.
He narrowly won voters earning between $50,000 and $200,000 a year, who make up more than half of the total electorate.
The plan will provide "the lowest top marginal income tax rate for small and medium-sized businesses in more than 80 years". Because the child tax credit is paired with actual spending (not just a loss in tax revenue), the Tax Foundation estimates that getting rid of it would save $710 billion. The consequences of that could be dire. This affects sole proprietors and other mostly smaller businesses.
The name "pass-through" refers to how income "passes through" to owners.
Overall, TPC's findings thoroughly undermine Trump's promise to "ensure that the benefits are focused on the middle class, the working men and women, not the highest-income earners", as many immediately observed on social media.
Corporations, meanwhile, would see their top tax rate cut from 35 percent to 20 percent. Experts say that's because there are still a lot of details that need to be worked out.
Under Trump's proposal, the tax rates on compensation and business income would no longer be the same.
Fewer low-income Americans will pay any federal income tax.
After-tax incomes of the richest 1% would rise by more than 8% on average - a saving of $129,030 per tax filer. This is exactly the opposite of what the 1986 reform aimed to do: reduce the structuring opportunities and make everyone at the same income level pay roughly equal taxes.
"It's probably best to think of the 1986 reform as increasing taxes on businesses", Auerbach says. From the obvious love of twitter to the accusations of bias against him that the President has aimed at much of the technology industry, there have been love-ins and fall-outs aplenty since Trump took office.
Observation: This statement appears to endorse a minimum tax on foreign earnings of US-based companies, without deferral and without regard to the Subpart F nature of those foreign earnings, but is unclear on the scope, and what continuing role, if any, the current subpart F rules will play under the revised tax system, for example, in the case of investment income. Corporate taxes will be eased, and estate taxes will be eliminated.
This clearly creates a strong incentive to characterize as much "compensation" as possible as regular business income.
The issue has been well-litigated over the years, resulting in a 2012 circuit court ruling that was deemed a win for tax evaders.
But he said there are problems that come with the plan. But, he assured reporters, the Trump team was opposed to a big new tax benefit for "guys like myself".
SALT allows individuals to deduct state and local taxes on their federal returns. Kansas abandoned this experiment earlier this year.
He said the tax cut plan was a core element. Attacks on the President's secrecy about his wealth looked promising for Democrats ahead of the general election campaign, but failed to disqualify Trump. That belief is already being strained. These corporations pay no corporate income tax.