Yesterday the Trump Administration announced the outline of its tax reform proposal. The proposal combines elements of President Trump’s original tax reform proposal announced during the campaign and of the House Republicans’ tax reform proposal (which is sometimes referred to as the “Blueprint”).

Under the proposal announced yesterday, corporate income tax rates would be reduced from the current 35% rate to 15%, which is the top corporate rate that Trump proposed during the campaign. This rate is lower than the 20% corporate rate that the House Republicans have proposed in the Blueprint.

A special maximum “pass-through” tax rate would also be set at 15%. It is unclear, however, whether the pass-through rate would be available to all pass-through businesses, or whether service businesses (such as law firms, accounting firms and investment firms) and “large” pass-throughs would be excluded. It is also unclear whether reasonable salaries would be deemed paid at the maximum individual rates, as the House Republicans’ similar proposal contemplated.

Individual tax rates would be reduced to three brackets: 10%, 25% and 35%. The 10% rate is lower than the 12% rate that Trump had proposed during the campaign. The 35% maximum rate is below the current 39.6% maximum rate, but higher than the 33% rate that Trump and the House Republicans had proposed. However, yesterday’s proposal does not indicate the income level for each bracket. President Trump’s earlier proposal had repealed the personal exemption, which would have had the effect increasing the taxes paid by large low-income families. Yesterday’s proposal is silent on personal exemptions.

The Trump Administration proposal would tax capital gains at a maximum rate of 20%, which is the same rate that President Trump had proposed during the campaign, but is higher than the 16.5% rate that the House Republicans proposed in the Blueprint. The 3.9% Medicare tax on investment income that was enacted as part of the Affordable Care Act would be repealed.

The standard deduction would be doubled from the current $12,700 for married couples to $25,400. Individuals would be denied all deductions, other than for mortgage interest and charitable contributions. Importantly, state and local taxes would not be deductible for federal income tax purposes; this is consistent with the House Republicans’ proposal in the Blueprint. (President Trump had originally proposed limiting the deductions for joint filers to $200,000.) The Trump Administration has also suggested additional tax relief for child care and dependent expenses. President Trump’s earlier proposal provided for a deduction for childcare and eldercare, and spending rebates for childcare expenses.

The corporate and individual alternative minimum tax would be repealed, as would the estate tax. It is unclear whether the gift and generation skipping transfer tax would be retained.

The Trump proposal does not include the controversial border adjustment feature of the House Republicans’ plan, and does not mention the House Republicans’ proposal to allow expensing for equipment, buildings and improvements or the House Republicans’ proposal to deny deductions for interest expense. (President Trump had previously proposed that taxpayers be permitted to choose between expensing new investments and the deductibility of interest.)

Finally, the Trump proposal would convert the current “worldwide” international tax system into a “territorial” system under which most foreign-source income is exempt. Trump’s original proposal called for a deemed repatriation of offshore corporate profits held in cash at a 10% rate, and other earnings at 4%. The House Republicans’ proposed rates were 8.75% for cash and cash equivalents and 3.5% for other offshore earnings. The Trump Administration did not announce a new rate yesterday, suggesting that it will ultimately propose a higher rate of tax on deemed repatriations.

Trump’s campaign tax proposal had been estimated to reduce federal receipts by between $2.6 trillion and $6.2 trillion over ten years. The new proposal is likely to lose less revenue because the top individual rates are higher and the standard deduction is lower, but will almost certainly be scored to increase the deficit substantially. Secretary of the Treasury Steven Mnuchin has said that growth will offset any net cost of the proposal. If, as is expected, the proposal is scored to lose revenue outside of the ten-year budget window, it would be ineligible for passage through reconciliation under Senate procedural rules, and therefore would need the support of some Senate Democrats in order to reach the 60 vote threshold to end any filibuster attempt.