It’s official — Donald J. Trump has been sworn in as the 45th president of the United States. With the Republicans having a majority in both the House of Representatives and the Senate, it’s just a matter of time before President Trump attempts to proceed with his tax reform proposals. Let’s take a look at the impact two of the Trump tax measures may have on Canadians.
Trump’s tax plan calls for a reduction in the number of U.S. federal income rate brackets from the current seven brackets to only three: 12 per cent, 25 per cent and a top rate of 33 per cent for individuals with income over US$112,500. This top tax rate would be nearly 7 per cent lower than the current top U.S. rate of 39.6 per cent. Of course, most states also impose a state income tax, with California’s rate being the highest at 13.3 per cent; however, seven states, most notably Florida, have no personal income tax whatsoever.
The question some high-income Canadians have been asking is whether Trump’s proposed top tax rate reduction could put pressure on our federal or provincial governments to lower our top tax rates?