In To A) FROM DE SUBJECT ET Deputy Minister Department of Finance Minist?re des Finances Canada Memo to Degas! Minister DMO (Original 3) Assoc. DM G7 Deputy RS (1) AssocTax Policy (8) Andrew Marsland ?lm Security classi?cation Classi?cation dc s?curil? SECRET Fantauzzo Our ?le None [era-ems EDMS TPB 23204104 Originalor/Teiephone number Auteur/Ninn?ro dc t?l?phone Rachel Lott Charles Shaun Your ?le Von-e reference 2016FIN445954 Date -. - 91? - . H-?il: Jame: In?! .31 cu' U.S. President-Elect?s Tax Plan {Summary of Proposed Changes and Implications for Canada This note is for your information. The attached note reviews the key tax proposals that have been put forward by the US. President?elect during the US. 2016 presidential election campaign and provides a preliminary assessment of potential implications for Canada. The President-elect?s tax plan, in its most recent version unveiled last September, is more closely aligned with the House Republicans? comprehensive plan for tax reform released last June (the Ryan-Brady plan) though signi?cant differences remain, as discussed in the attached I Lowering the corporate-tax rate from 35 per cent to 15 per cent and eliminating the A domestic production activities deduction; I Lowering personal income tax rates (especially the top rate); increasing standard deductions and lowering taxes on capital gains/dividends for hi gh-income individuals; I Eliminating the alternative minimum tax on individuals and corporations; . I I Enacting a one-time deemed repatriation of deferred foreign pro?ts in controlled foreign subsidiaries, at a tax rate of 10 per cent; I Repealing the federal estate tax. SADM: Andrew Marsland (613-369-3739) Director: Maude Lavoie (613-369-3 805) Can ad IIJI 21 000001 Page 2 is withheld pursuant to sections est retenue en vertu des articles 21(1)(b) of the Access to Information Act de la Loi sur l?acces a l?information Section 1 of the attached note reviews proposals concerning the taxation of business, while section 2 reviews proposals concerning the taxation of individuals. Section 3 discusses the likely economic and ?scal effects of the proposals for the U.S., and section 4 considers their distributional impact. . We will continue monitoring developments in U.S. tax policy over the coming months and provide you with updates as needed. 000003 4 Tax Plan Summary of Proposed Changes and Implications for Canada I. Taxation of Businesses Key Changes Corporate income tax rate 0 The President-elect has proposed to reduce the US. federal corporate income tax (CIT) rate from 35 per cent to 15 per cent. This commitment would be considered a shortiterm priority as part of his ?IOU-day action plan to Make America Great Again.? - No of?cial costing is yet available, but it can be presumed that this action would be one of the most signi?cant cost items in the overall tax agenda. House Republicans are also currently proposing an aggressive reduction to 20 per cent. It is unclear whether the 15 per cent rate will be available to ?pass-through? corporations.1 000004 Capital expensing for manufacturers Firms engaged in manufacturing in the U.S. would be able to choose between full expensing of tangible capital investment and deductibility of interest paid e. g. effectiver allowing a - type of cash ?ow taxation on an elective basis. This is a more limited and targeted measure than the proposal from House Republicans to allow all businesses to immediately expense capital investments, while keeping the deductibility of interest paid. 0 Intended to stimulate investment in the manufacturing sector, this provision would decrease U.S. federal revenues by a total of about $325 billion over the 2017 to 2020 period, according to the Tax Policy Center Base-broadening measures .0 The domestic production activities deduction (DPAD) and most corporate tax expenditures other than the research and development credit would be eliminated. The same reform was also proposed by House Republicans. The DPAD was introduced in 2004 to ease the tax burden of domestic manufacturers and certain other producers, and became fully phased-in at 9 per cent as of 201 0. The DPAD applies to income from: the manufacmre', production, growth or extraction of tangible personal property; the production of quali?ed ?lm; the production of electricity, natural gas, or water; the construction of real property; and architecture/engineering services. . 0 At a U.S. corporate tax rate of 35 per cent this measure has provided an effective tax rate reduction of 3.15 percentage points. Were the U.S. corporate tax rate to be reduced to 15 per cent as Outlined in the President?elect?s plan, the DPAD would provide an effective rate reduction of only 1.35 percentage points. 5.21mi.) 000005 The Urban?Brookings Tax Policy Center has estimated that repealing corporate tax expenditures under the Presidentrelect?s tax plan would raise a total of approximately 61.8 billion USD over 2017 to 2020. Additionally, there may be some gains in administrative ef?ciency from eliminating the DPAD and all other business tax credits, aside from the research and development credit. Taxation of U.S. multinationals A one-time deemed repatriation of currently deferred pro?ts in controlled foreign corporations at a 10 per cent tax rate would be enacted. U.S. corporations are taxed on a worldwide basis, meaning thatthey are generally taxed on income that is earned outside the U.S. to the same extent as income earned inside the U.S. However, this tax is only assessed when the income is repatriated to the U.S. and, as a result, U.S.-headquartered ?rms operating in lower?tax jurisdictions have an incentive to retain foreign-source income outside the U.S. and avoid paying taxes. Some $2.6 trillion in pro?ts are currently booked offshore according to Joint Committee on Taxation estimates (September 201.6). 3 Certain kinds of income, including passive investment income, are not eligible for deferral and are subject to ?ill U.S. corporate taxation in the year camed. . 000006 Page 7 is withheld pursuant to sections est retenue en vertu des articles 21(1)(b) of the Access to Information Act de la Loi sur l?acces a l?information 1 Other Measures Alternative Minimum Tax 0 The President-elect?s plan would eliminate the corporate alternative minimum tax (AMT), which would lower the average effective tax rate for affected ?rms and consequently increase the overall competitiveness of the U.S. CIT. Elimination of the AMT is also part of the current House Republican tax plan. Canada does not impose a corporate AMT. credit for employer?provided day care 0 The cap on the tax credit for employer?provided day care is proposed, to be increased from $150,000 to $500,000, and its recapture period to be reduced to 5 years ?'om 10 years. The current tax measure allows corporations that provide appropriately licensed on-site childcare centres a tax credit of up to 25 per cent cf facility expenditures, plus 10 per cent of resource and referral costs, up to a limit of $150,000 per calendar year. A portion of the credit is recaptured if the centre is kept in service for less than 10 tax years. METR Analysis 000008 Pages 9 to I a 10 are withheld pursuant to sections sont retenues en vertu des articles 21(1)(b) of the Access to Information Act de la Loi sur l?acces a l?information Key Changes Changes to personal income tax brackets and deductions The President-elect?s tax plan would reduce the number of federal individual income tax brackets from seven to three: 12, 25 and 33 per cent, cutting the top 39.6 per cent rate by 6.6 percentage points (see Table A very similar rate structure was proposed by House Republicans. The proposed consolidation of income tax brackets is reminiscent of Canada?s 1987 tax reform when 10 income tax brackets were reduced to three and the top federal income tax rate was cut ?om 34 per cent to 29 per cent. 0 The last major reform of the U.S. personal income tax system occurred under the Tax Reform Act of 1986: the top tax rate for individuals was cut from 50 per cent to 28 per cent and ?fteen income tax brackets were reduced to four. Table 1 - Personal Income Tax Rates under Current Law and Proposed Tax Plan Among Tax Filers Claiming the Standard Deduction. 2016 11 II. Taxation of Individuals Proposed Rates and Brackets Current Rate and Brackets i 00001 1 -12- Table 2 Highest Combined Federal and Provincial Marginal Tax Rates in selected Canadian Provinces. 201 6 Province Top Combined Federal and Income threshold above which the rate applies The standard deduction is to be increaSed ?'om $6,300 to $15,000 for single ?lers and from $12,600 to $30,000 for married couples ?ling?jointly. Personal exemptions, currently $4,050 per person in the ?ling household (including in respect of minor children), would be eliminated. Similar, though smaller increases in the deduction were proposed by House Republicans. 521nxm 521nxm 000012 -13- 0 Itemized deductions are to be capped at $200,000 for married joint ?lers and $100,000 for single ?lers. U.S. tax ?lers can choose to either itemize their deductions or use the standard deduction, subject to a partial clawback at higher incomes. House Republicans proposed to eliminate all itemized deductions except the mortgage interest deduction and the charitable contribution deduction. 0 According to the U.S. Tax Policy Center, the cap on itemized deductions and lower-tax rates (along with the repeal of the estate tax, discussed below) would reduce charitable giving from 4.5 per cent to 9 per cent per year. The President-elect?s plan proposes the elimination of the Head of Household ?ling status. This ?ling status applies wider tax brackets and a larger standard deduction to individuals who are unmarried, have paid more than half the cost of keeping a home, and have a qualifying person living with them. There does not appear to be a consensus between House Republicans and the President-elect on this and other child/dependency proposals (discussed below). Changes to the tax treatment of capital gains 0 Under the President-elect?s tax plan, the current capital gains tax rate schedule with rates of 0 per cent, 15 per cent and- 20 per cent would be maintained but adapted to the revised tax bracket structure (Table 3). The same treatment would apply to dividends. - In addition, the Net Investment Income Tax would be eliminated, which applies at a rate of 3.8 per cent to investment income (including interest, dividends and capital gains) earned by individuals with adjusted gross inCOmes exceeding a threshold of $200,000 US for single ?lers (or $250,000 US for married couples ?ling jointly). This tax was introduced in 2013 as one of the tax provisions in the A?brdable Care Act. 000013 Table 3 - Capital Gains and Dividend Tax Rate Schedule Under the Proposed Plan Married Joint Filer Capital Gains Tax Rate Single Filer brackets 000014 Changes to bene?ts for children and dependants 0 Child care costs for children under the age of 13 and costs for the care of elderly dependants are to be made deductible ?om adjusted gross income. The deduction for children would be up to the average cost of care in the ?ler?s state and would be provided to families who use stay-at?home parents or grandparents as well as those who use paid caregivers the measure would essentially be a deductionin respect of a child or dependant relative, available regardless of whether care costs are incurred). It would be limited to four individuals per taxpayer. The-deduction would be phased out for single ?lers earning more than $250,000 and couples earning over $500,000. 0 Currently, the United States has a Child and Dependant Care Credit. The dollar limit on . the amount of the expenses is $3,000 for the care of one qualifying individual or $6,000 for two or more qualifying individuals. The amount of the credit is between 20 and 35 per cent of allowable expenses, depending on the amount of adjusted gross income. It is not clear if this credit will be eliminated. - Spending rebates of up to $1,200 per year for childcare are to be introduced for low-income families, implemented through the Earned Income Tax Credit. As well, there are proposed changes to the refundable Child Tax Credit (currently an amount of $1,000 for individuals with a qualifying child under the age of 1 7). It is preposed that this credit will be consolidated with personal exemptions for dependants into an increased child credit of $1,500, the ?rst $1,000 of which will remain refundable and $500 or which will be allowed for non-child dependants. - 000015 0 Dependent Care Savings Accounts (DCSAs) are to be offered to allow tax ?lers to save for- the care of children or elderly parents. Total annual contributions would be limited to $2,000 per year with a 50 per cent match of contributions for low-income families. Other Measures Alternative minimum tax 0 It is proposed that the alternative minimum tax (AMT) for individuals be eliminated. The AMT is a method of determining income tax designed to ensure taxpayers cannot avoid income tax entirely through the use of deductions, exemptions, losses, and credits. Individuals must pay the greater of their AMT and their regular tax liability. The AMT applies. at a rate of 26 per cent on the ?rst $175,000 of income ($87,500 for married ?ling separately) and 28 per cent on income above that threshold, and there is an exemption to ensure middle-class taxpayers are not subject to the AMT.8 Elimination of the individual AMT was also proposed by House Republicans. 8 The exemptions for 2016 are $53,900 for single ?lers, $83,800 for married ?ling jointly, and $41,900 for married ?ling - sepamtely. 000016 17 The Tax Policy Center estimates that this proposal would cost $412.8 billion over the 2016-26 period or about 7 per cent of the total revenue impact of the President-elect?s tax plan over the same time period. According to the'Tax Policy Center, about 4.1 million U.S. taxpayers were subject to the AMT in 2015, and about 4 per cent of U.S. taxpayers would be affected by the proposal. Taxation of carried interest '0 Carried interest the share of pro?ts of an investment paid to the investment manager in excess of the manager?s contribution to the partnership would be taxed as ordinary income. Currently, carried interest income is taxed as capital gains, subject to a top marginal federal personal income tax rate of 23 .8 per cent, The Tax Policy Center notes that hedge funds and private equity partnerships, which earn a substantial portion of income in the form of carried interest, would qualify for the 15-per-cent business tax rate and thus could retain a substantial tax advantage on their income compared with wage earners. In Canada, carried interest is generally taxed as capital gains. Estate and ex 0 The President-elect?s tax plan eliminates federal estate and gi? taxes as well as the step-up . in basis of assets at death. Accrued capital gains exceeding a $5 million or $10 million threshold (this asPect of the tax plan is unclear) would be subject to capital gains tax at death. The elimination of the estate tax has also been proposed by House Republicans. The current 40-per?cent estate tax applies to the fair markettvalue of estates exceeding a $5.45 million threshold in 2016. Under current law, the basis of a property that a bene?ciary inherits from a decedent is ?stepped-up? to its fair market value at the decedent?s time of death. As a result, individuals with estates below the $5.45 million threshold would not pay estate tax or capital gains tax at death. Estate tax is owed on about 0.2 percent of estates, and the average effective tax rate (taking into account the exemption) among these estates was 16.6 per cent in 2013. .1i21(1Xa) .w 000017 In addition, the Tax Policy Center notes that the elimination of the step?up in basis could remove distortions by reducing the incentive for wealthy individuals to hold on to - appreciated assets until death in order to avoid capital gains tax the lock-in effect). 'The Tax Policy Center also notes that the repeal of the estate tax would be expected to reduce the incentive for charitable giving among the wealthy. 111. Economic and Fiscal Effects Two studies by the Tax Policy Center and the Tax Foundation are available that assess the economic and ?scal effects of the President-elect?s tax plan. Key results from these studies are summarized in Table 4. These studies indicate that the effects of the tax plan will critically depend on whether the revenue shortfall is offset by higher federal debt or lower spending. Only the Tax Policy Center study factors in the impact of higher interest rates due to higher federal debt. I Table 4 - Projected Economic and Fiscal Effects . Federal Tax Revenue (years in brackets) Real GDP Growth 2016-25 points) Congressio E?dg? pf?cgw 19.2 4 .7 (5917-26 ?arm's: at." law ?Mr; .345 rise-?gmassassins .. manganese. . .i am ai ro'ectionmean-z 5' Ar? now-gs. 5? . 5.1a.? .Tax Policy Geiger generagogimodggl A 6.2 -6.0 (2016-26) my: 4:1 asses? .. - Iran.- i ?gameTax Foundation (low pass-through tax rate) 8.2 --3.9 (2016-25) Note: Effects on tax revenues incorporate dynamic macroeconomic feedback effects. Sources: Congressional Budget Of?ce; Tax Foundation; Tax Policy Center In the short term, savings and investment are projected to increase due to the lower cost of capitalresulting ?bm a lower corporate tax rate, the expensing of capital investments for manufacturing ?rms and lower effective tax rates on capital gains, dividends and interest income. The Tax Foundation estimates that this would lead to a capital stock about 20 percentage points higher than under the current baseline by 2025. In the long term however, the Tax Policy Center projects that unless the tax plan is ?nanced through spending cuts, higher 000018 .19.. interest rates due to larger government debt will crowd out private investment and lead tolower investment. Table 4 shows the projected overall effects of the tax plan on GDP growth. According to the Tax Pelicy Center, aggregate demand would increase for several years due to the tax savings accruing to households and increased investment by businesses. Using a Keynesian model, the Tax Policy Center?predicts that GDP would increase by 1.7 per cent in 2017, by 1.1 per cent in 2018 and by smaller amounts in subsequent years. Using an overlapping generations model that accounts for longer-term impacts on incentives to work, save and invest, the Tax Policy Center predicts smaller positive effects over the next few years and small negative effects beginning in 2025, reaching -4 per cent in 2036. This is because higher federal debt and higher interest rates would lead to a reduction in the capital stock in the long term, which in turn would result in lower wages and a drop in the labor supply. The Tax Foundation, using a neoclassical open-economy model, predicts that GDP growth would be 6.9 percentage points higher between 2016 and 2025 than under current law. As for ?scal effects, the President-elect has not released a ?scal ?'amework for his campaign proposals as a whole, but he announced in the September speech in which he outlined his tax plan that it would comprise a $4.4 trillion tax cut over the next 10 years (about 2 per cent of GDP over the period), resulting in a revenue reduction of $2.6 trillionafter accounting for economic feedback effects. This is inline with estimates by the Tax Foundation, which projects a static revenue reduction of $4.4 trillion trillion should pass-through income be subject to the 15-per-cent rate) for the period 2016-2025 and a dynamic cost of $2.6 trillion trillion) over the same period. The Tax Policy Center estimates static total revenue loss at $341 billion for 2017, and $6.2 trillion for the period 2016-2026. These estimates are based on the assumption that pass-through business rate would also be reduced to 15 per cent, and are in the same order as the Tax Foundation?s static estimate under this scenario. The Tax Policy Center presents estimates of dynamic revenue loss using two modelling techniques, which both project revenue losses of about $300 billion for 2017 and $6.0 trillion for 2016-2026, considerably larger than the dynamic effects predicted by the Tax Foundation and the President-elect?s campaign. I IV. Projected Distributional Impact According to the Tax Policy Center, the President-elect?s tax plan would reduce average taxes throughout the income distribution, although some ?lers will face tax increases. Overall, taxes would decrease by an average of $2,940, or 4.1 per cent of after-tax income. The lowest quintile would see taxes reduced by $110 (0.8 per cent), while the tap quintile would experience a tax reduction of 16,660 (6.6 per cent). Middle-income households would receive an average tax cut of $1,010, or 1.8 per cent of alter-tax income.9 Families in the top 1 per cent (excluding the 9 Taxes for the top 1 per cent would decrease by an average of $214,690, or 13 .5 per cent of alter-tax income. 000019 i' top 0.1 per cent) of the income distribution would have an average reduction in tax liability of $215,000 in 2017, and 47 per cent of the tetal tax savings would accrue to this group. This is a reduction in average federal tax rate of 9 percentage points, to 24.4 per cent. The tax liability of the top 0.1 per cent would be $1.1 million lower on average; with this group receiving 24 per. cent of total tax savings. The average federal tax rate for individuals in the top 1 per cent would drop 9.3 percentage points to 25.1 per cent. The Tax Foundation argues that low- and modest-income families would bene?t signi?cantly ?om the positive economic effects of the tax reductions, and would thus see a signi?cant increase in their a?er-tax incomes. 20 000020 Tax Plan Donald Trump for President POSITIONS STATES GETINVOLVED nu scetbme 3* cancer-33? ?iicitLtERv-wf 5 MEDIA CONTRIBUTE DONALD J. VISION - Reduce texas across-the-bcard. especially for working and middle-income Americans who receive a massive tax reduction. - Ensure the rich will pay their fair share, but no one will pay so much that it destroys jobs or undermines our ability to compete. - Eliminate special interest loopholes. make our business tax rate more competitive to keep jobs in America. create new opportunities and revitalize our economy. - Reduce the cost of childcare by allowing families to fully deduct the avarage cost of childcare from their taxes. including stay-at?home parents. Read the Fact Sheet on Donald J. Trump's Tax Po?cy, here. Read Mr. Trump's Remarks at the Detroit Economic Club and the New York Economic Club. TAX LAW CHANGES The Trump Plan will revise and update both the individual and corporate tax codes: individual income Tax I Tax rates 7 The Trump Plan will collapse the current seven tax brackets to three brackets. The rates and breakpoints are as shown below. Low-income Ametioans will have an ettedlve income tax rate of D. The tax brackets are slmilarto those in the House GOP ta; blueprint. Brackets Rates for Married-Joint ?lers: Less than 575.000: 12% More than $75,000 but less than $225000: 25% More than sz?spoo: 33% "Brackets for single ?lers are $5 of these amounts The Trump Plan will retain the existing capital gains rate structure (maximum rate of 20 percent) with tax brackets shown above. Carried interest will be taxed as ordinary income. The 3.8 percent Obamacare tax on investment income will be repealed. as will the alternative minimum tax. Deductions GALLERY VIDEO An America First Economic Plan: Winning The Global Competition Detroit. Michigan August 8. 2016 I DctroithonomirCiub i El Click to Watch REMARKS An America First Economic Plan: Winning The Global Competition Taxes are one of the biggest differences in this race. 2016-11-21 000021 Tax Plan I Donald Trump for President The Trump Plan will increase the standard deduction forjoint ?lers to $30,000, from $12,600, and the standard deduction for single ?iers will be $15,000. The personal exemptions will be eliminated as will the head-of-household ?ling status. In mlrtitinn_ H19 Tn imp Plan will rap itamivnrt dodnr-tinne at grandam Marrian inint More or $100,000 for Single ?lers. Death Tax The Trump Plan will repeal the death tax, but capital gains held until death and valued over $10 milion will be subject to tax to exempt small businesses and family farms. To prevent abuse. contributions of appreciated assets Into a private charity established by the decedent or the decedent?s relatives will be disallowed. Childcare Americans will be abte to take an above-the-line deduction forchildren under age 13 that will be capped at state average for age of child, and for eldercare tor a dependent The exctusion will not be ava?able to taxpayers with total income over $500,000 Married-Joint [$250,000 Single. and because of the on the size ofthe bene?t, working and middle class families will see the largest percentage reductionin their taxable income. The childcare exclusion would be provided to families who use stay?at?home parents or grandparents as well as those who use paid caregivers, and would be ilmited to 4 children per taxpayer. The eldercare exclusion would be capped at $5,000 per year. The cap would increase each year at the rate of in?ation. The Trump Plan would otter spending rebates for childcare expenses to certain low-income taxpayers through the Earned Income Tax Credit (EITC). The rebate would be equal to 7.65 percent of remaining eligible childcare expenses. subject to a cap of half of the payroll taxes paid by the taxpayer (based on the iower?eaming parent in a two-eamer household). This rebate would be available to married joint ?lers earning $62,400 ($31,200 for single taxpayers) or less. Limitations on costs eligible for exclusion and the number'of bene?ciaries would be the same as forthe basic exclusion. The ceiling would increase with inflation each year. All taxpayers would be able to atabilsh Dependent Care Savins Accounts (DCSAs) for the bene?t of speci?c individuals, including unbom children. Totai annual contributions to a I DCSA are limited to $2,000 per yearfrom all sources, which include the account owner (parent in the case of a minor orthe person establishing elder care account), immediate family members of the account owner, and the employer of the account owner. When established for children, the funds remaining in the account when the child reaches 18 can be used for education expenses, but additional contributions could not be made. To encourage lower-income families to establish DCSAs for their children, the govemment will provide a 50 percent match on parental contributions of up to $1,000 per year for these households. When parents ?ll out their taxes they can check a box to directly deposit any portion of their into their Dependent Care Savings Account All deposits and earnings thereon w?l be free from taxation, and unused balances can rollover from year to year. Hillary Clinton - who has spent her career voting for tax increases plans another massivo job-killing $1.3 tritiion-doilartax increase. Her plan would tax many small businesses by almost ?fty percent. Recently, at a campaign event, Hillary Clinton short-circuited again to use a now famous term ?when she accidentally told the tniih and said she wanted to raise taxes on the middle class. i am proposing an across-the-board income tax reduction, especially for middle- income Americans. This will lead to millions of new good-paying jobs. The rich will pay their fair share, but no one will pay so much that it destroys Jobs, or undermines our to compete. As part of this reform, we will eliminate the Carried Interest Deduction and other special interest loopholes that have been so good for Wall Street investors, and people like me, but unfair to American workers. will be a major feature of the plan. Our current tax code is so burdensome and complex that We waste 9 billion hours a year in tax code compliance. ?adMes Paid for by Donald J. Trump for President, Inc. Contact The Campaign - P?t?ra?gy??inlicy - Tel: 646?736-1779 ?By entering your mobile number you are agreeing to receive periodic text messages from Donald J. Trump for President, In'c. Message and data rates m?mu?ngext to opt-out. T&C/Privacy Policy: sms? terms/B 8022 instagram youtube ?ebea?a The Trump Plan wiil lower the business tax rate from 35 percent to 15 percent, and eliminate the corporate aitemative minimum tax. This rate is available to sit businesses, both small and large, that want to retain the pro?ts within the business. itw?i provide a deemed repatriation of corporate pro?ts held offshore at a one-time tax rate of 10 percent. it eliminates most corporate tax expenditures except forthe Research and Development credit. . 2016-11-21 000022 Tax Plan I Donald Trump for President Firms engaged in manufacturing In the US may elect to expense capital investment and lose the deducttb?ity of corporate interest expense. An erection once made can only be revoked within the ?rst 3 years of election; if revoked. returns for prior years would need to be amended to show revised status. After 3 years. election is irrevocable. The annual cap for the business tax credit for on-siie childcare authorized by Sec. 205 of the Economic Growth and Tax Relief Reconciliation Act of 2001 would be increased to $500000 per year (up from $150,000) and recapture period would be reduced to 5 years (down from 10 years). Buainesses that pay a portion of an employee's childcare expenses can exclude those contributions from income. Employees who are recipients of direct empioyer subsidies Would not be able to exclude those costs from the individual Income tax and the costs of direct subsidies to employees could not be used as a oust eligible for the credit. CONTRAST WITH CLINTON I The Trump Plan protects alt low-incomeand middle-income Americans and lowers' their taxes. As the Tax Foundation put it: ?Donald Trump's plan is a tax cut for all income groups. while Hillary Clinton?s plan is a tax increase on selected income groups'. The Tax Foundation determined that. on average. taxpayers will receive a tax cut ofst .818 under the Plan. but a tax increase of $176 under the Clinton plan. [Tax Foundation. Sept. 23. 2016] - Donald J. Trump's tax plan will increase the economy and grow jobs by almost 2 million. while Hillary Clinton's tax ptan Will shrink the economy and lose 300.000 jobs. in combination with the total economic reform agenda. the Trump economic plan will create at least 25 million jobs over the next 10 years. [Tax Foundation, Sept. 19. 2016]. [Tax Foundation. Jan. 26. 2016]. 2016-11-21 000023 (FOLD HERE) (PLIER ICI) Department of Finance Ministers des Finances Canada Canada for Signature by/ Information of A signer par Pour l?information dc Deputy Minister Prepared by (name/initials/division) Pr?par? par (nomlniitiales/division) Rachel Lott - ITPER In consultation with En consultation avec David Messier - ITPER by _A2prouv?par . I Maude Lavoie Director . Direct?, 316113 LeBlanc,7 - . . 1m Gree General Director Brian Ernewein/ Dim? gm?m? . - Miodrag ovano 1 Senior Assistant Deputy Minister Sous-ministre adjoint principal Andrew Assmiate Deputy Minister G7 I Deputy for Canada Sous-ministre d?l?gu? et reprieentant Stewart du Canada au G7 Associate Deputy Minister - Sous?ministre d?l?gg? Chas Forbes Deputy Minister Sous-ministre Remarks: Remanques: U.S. President-Elect?s Tax Plan of Proposed Changes and Implications for Canada File no. No de dossier Date 2016FIN445954 Associate Deputy Minister G7 Deputy for Canada Sous-ministre d?l?gu? et repr?sentant du Canada au G7 (Sign on behalf of (Signer an mm (In SM) Associate Deputy Minister Sous-ministre d?l?gu? (Sign on behalf of DM) (Signer an nom du SM) Assistant Deputy Minister Sous-ministre adjoint (Sign on behalf of DM) (Signer au nom du SM) 000024