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ERROR: type should be string, got "https://www.barrons.com/articles/the-trump-tax-plan-the-good-bad-and-dumb-1493438617\nTrump’s Tax Plan\nThe Trump Tax Plan: The Good, Bad, and Dumb\nGene Epstein\nUS Treasury Secretary Steven Mnuchin speaks on US President Donald Trump's tax reform plans.\nMandel Ngan/AFP/Getty Images\nPresident Donald Trump’s proposed tax plan is a mix of good, bad, and dumb. Pruning and modifying it as it moves forward will hopefully tip the balance in favor of the good.\nFortunately, the plan doesn’t include a border adjustment tax. The BAT, which Trump has favored in the past, would have pitted importers against exporters, while running a Rube-Goldberg experiment on the economy. (See related story: “Under Trump Tax Plan, Banks, Restaurants, MLPs Could Win Big.”)\nLET’S START WITH THE GOOD. The proposed reduction in the top tax rate on corporate profits to 15% from 35% goes further than the cut Barron’s proposed last fall (“Cut the Top U.S. Corporate Tax Rate to 22%,” Nov. 26). But it could be just the first step in a negotiation that might leave the new levy at closer to 20%. That is the approximate zone in which the corporate rate is likely to be revenue-neutral, and might even generate more revenue.\nIf a corporation nets more earnings as a result of a lower tax, the extra sums aren’t completely lost to the tax collector, but take the form of taxable salaries, dividends, and capital gains. Also, since U.S. corporate tax rates are among the highest in the world, slashing the rate would dramatically reduce corporate flight to low-tax countries. There would also be windfall revenue from a one-time “amnesty rate,” expected to be 10%, to induce repatriation of the estimated $2 trillion in profits that U.S. corporations are keeping offshore.\nThe dumb part is that, in an apparent attempt to achieve parity with the proposed 15% rate on corporate earnings, individuals owning “pass-through” entities such as S corporations will now enjoy a 15% rate as well, rather than paying ordinary income tax rates. As Cato senior fellow Chris Edwards points out, given the double taxation of corporate profits—which Treasury Secretary Steven Mnuchin, who unveiled the plan, should know about—a 15% rate would greatly advantage pass-through entities and disadvantage conventional corporations.\nOwners of corporations are stockholders whose income is taxed twice. The levy on dividends and capital gains, currently 23.8%, would be nudged down to 20%, because Trump would repeal the 3.8% investment tax imposed by President Obama. Accordingly, if $100 of corporate profit is taxed at 15%, that leaves $85, to be then taxed at 20% as dividends or capital gains. These two rounds of taxation therefore reduce each $100 to $68, for a 32% effective rate. So to achieve parity, the owners of pass-through companies should also be taxed at about 32%.\n9 Undervalued Earnings, Revenue Powerhouses\nTrump Serves Up a Back of the Napkin Tax Plan\nThe Media Gush, Gnash Teeth on Trump Tax Plan\nTrump would eliminate the estate tax, a move that might be close to revenue-neutral over the long run. If investments and capital assets left to heirs remain intact, those holdings would continue to generate a rising sum of tax revenue from income and capital gains. There would also be additional revenue from the income tax, since there would be no incentive to engage in tax avoidance strategies in which parents shift assets to offspring in a lower bracket. In any case, the take from the estate tax accounts for just 0.7% of federal revenue.\nFINALLY, THE BAD. With the Congressional Budget Office constantly warning that the U.S. economy could face a fiscal crisis from persistent budget deficits, it’s irresponsible to propose a series of tax cuts that aren’t revenue-neutral, but instead revenue-losing. The proposed rollbacks on income taxes are surely enticing. The standard deduction would double, to $12,700 for single filers and $25,200 for married couples filing jointly, a huge break for middle-income earners who don’t have a lot of deductions. The only allowable deductions would be for mortgage interest, charitable contributions, and retirement savings. The alternative minimum tax would be abolished, and today’s seven tax brackets, topping out at 39.6%, would be trimmed to three: 10%, 25%, and 35%.\nBut the revenue loss over the next decade would be in the trillions. Accordingly, Mark Doms, senior economist at Nomura, plausibly predicts that large parts of this tax plan won’t get passed.\nPresident Trump should try to lift the U.S. economy from its dismal growth rate of 0.7% in the first quarter. But this tax plan, in current form, isn’t the best way to do it.\nEmail: editors@barrons.com\nCutting Taxes Is Good. Cutting them as much as Trump wants is dangerous."