But what that tax overhaul will look like is a detail the White House and Republicans still have to hammer out.
Republicans have proposed two tax reform proposals: Trump’s plan and House Speaker Paul Ryan’s.
Lower taxes for the top 1%
Currently, there are seven tax brackets, the lowest marginal tax rate being 10% and the highest 39.6%. Ryan’s plan would reduce that number to three: 12%, 25% and 33%.
Under the current tax code, a single filer earning $100,000 pays 28% of their income, or $28,000, in tax.
Under Ryan’s plan, the same filer would pay 25%, or $25,000, in tax — a savings of $3,000. Meanwhile, under the current tax code, a filer earning $500,000 pays 39.6% in tax, or $198,000. Under Ryan’s plan, the same filer would pay 33%, or $165,000 — a savings of $33,000.
But that isn’t the whole picture. Ryan’s plan would also cut taxes on investments, dividends and capital gains by about half, a major boon for the top 1%. In 2013 (the most recent year for which data are available), the top 1% earned 38% of their income in capital gains, according to the Congressional Budget Office.
The Tax Policy Center, a liberal tax policy think tank, estimates that, under Ryan’s plan, those with incomes greater than $1 million would pay $302,000 less in tax in 2025 — an 11% increase in after-tax income. The bottom 80%, meanwhile, wouldn’t see their after-tax incomes change by more than half a percent in either direction. People making between $40,000 and $50,000 would see an extra $120, TPC estimates.