Trump slashes the biggest tax cut

Washington, April 28: The Trump government has explored the biggest tax cut in American history. The President Trump's tax plan is aimed at slashing the burden for individual taxpayers.

But it would also eliminate a deduction that millions of people – largely high-income earners – in Pennsylvania and New Jersey use to get a break on their state and local taxes.

While President Trump's tax reform proposals announced Wednesday would be large, they would fall in third place as the biggest U.S. tax cut since 1940.

Key details of the plan, unveiled Wednesday, are still being worked out – for example, Trump's plan would reduce the seven income tax brackets to three brackets of 10 percent, 25 percent, and 35 percent. Which incomes would fall under those brackets has not been decided yet, officials said.



"You don't know what the bracket cutoffs are, so you can't compare them to current law," said Alice Abreu, a tax law professor at Temple University. "What you can say fairly certainly is that [the plan] benefits people at the higher end of income distribution."

The country's highest-income earners would see their federal income tax fall from 39.6 percent to 35 percent. The plan would also eliminate the 3.8 percent investment tax for Obamacare, and the estate tax, which largely affects the wealthy.

The plan would also double taxpayers' standard deduction, increasing it for married couples to $24,000. In turn, Trump would eliminate all itemized deductions, other than mortgage and charitable deductions.