President Donald Trump's tax reform proposal will simplify the tax code and encourage economic growth by reducing the number of tax brackets and eliminating certain taxes, according to White House chief economic adviser Gary Cohn.
Speaking to reporters at Wednesday's White House press briefing, Cohn said Trump is promoting the most significant tax reform legislation since 1986. The tax reform bill focuses on job creation, economic growth, and helping low- and middle-income families who have been left behind by the economy, Cohn said.
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"We're going to cut taxes and simplify the tax code by taking the current seven tax brackets we have today and reducing them to only three brackets—a 10 percent bracket, a 25 percent bracket, and a 35 percent bracket," Cohn said.
The plan proposes eliminating the alternative minimum tax and death taxes.
"The [alternative minimum tax] creates significant complication and burdens which require taxpayers to do their taxes twice to see which is higher," Cohn said. "That makes no sense, and we should have one simple tax code."
"We are going to repeal the death tax," he said. "The threat of being hit by the death tax leaves small business owners and farmers in this country to waste countless hours and resources on complicated estate planning to make sure their children aren't hit with a huge tax when they die."
Cohn added that the tax plan would double the standard deduction so married couples will not pay any taxes on the first $24,000 of income, creating in essence a zero percent tax rate.
"The largest standard deduction also leads to simplification because far fewer taxpayers will need to itemize, which means their tax form can go back, yes, to that one simple page," he added.
The plan would attempt to drive economic growth through capital investment by returning the top capital gains and dividends rate to 20 percent. The plan also would repeal the 3.8 percent Obamacare tax on dividends and capital gains, which Cohn said has been a direct hit on investment income and small businesses.
Cohn said the White House plans to eliminate tax breaks that mainly benefit top earners. However, deductions for home ownership, charitable giving, and retirement savings would be protected under the tax reform.
Cohn noted that families would benefit from tax relief for child and dependent care expenses through the plan.