Billionaires will benefit from Trump's tax plan the most


President Donald Trump put out a rough draft of his tax reform plan on Wednesday — a one-page document that lacks detail and follows the tax proposal he released during the campaign almost verbatim.

With so few details, it's hard to say how the plan will actually benefit low-income to middle-income families in America.

However, what we do know is that millionaires and billionaires — like Trump and his family — are set to benefit handsomely if a plan resembling this one comes to pass. That's because two of the plan's biggest proposals directly impact the wealthiest Americans.

The first is a repeal of the estate tax, which the Trump administration ominously dubbed the "death tax."

RELATED: How much Americans pay in taxes in each state

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Best and worst states for retirement
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Best and worst states for retirement

1. Florida 

You knew it had to be high on the list, didn't you? In terms of affordability, Florida topped the list while it placed fifth in terms of quality of life, overcoming its 20th-ranked healthcare rating.

2. Colorado

Ranked second in healthcare while quality of life came in 8th place, Colorado is constrained by its 23rd-place ranking in affordability.

3. South Dakota

The home of Mount Rushmore is the second most affordable state and ranked sixth when it came to healthcare, but can't break the top half in quality of life (ranked 32nd).

4. Iowa

Not typically thought of as a retirement destination, Iowa has decent rankings across the board (9th in healthcare, 11th in quality of life and 26th in affordability).​​​​​​​

5. Virginia

Quality of life ranks well in Virginia (9th) while affordability and healthcare rankings are above average (18th and 21st respectively).

The next five desirable retirement states are, in order:

Wyoming

New Hampshire

Idaho

Utah

Arizona

46. Arkansas

Dead last in quality of life and 45th in healthcare, Arkansas is pulled up by its 20th-place showing in affordability.​​​​​​​

47. Mississippi

The same principle applies to Mississippi, but even more so. The state is 49th in quality of life and last in healthcare, but it ranks 10th in affordability.

48. Rhode Island

Healthcare is above average (22nd), but quality of life and affordability are poor at 46th and 48th place, respectively.

49. New Jersey

The least affordable state in the union also has below average rankings in quality of life (28th) and healthcare (33rd).​​​​​​​

50. Kentucky

Kentucky ranks 47th in both quality of life and healthcare and only 38th in affordability, earning the Bluegrass State WalletHub's least desirable retirement state ranking for 2018.​​​​​​​

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The estate tax only benefits the very wealthy. It taxes the estate of a deceased person, but only if the estate is worth more than $5.49 million. And even then, the entire estate isn't impacted. Only the amount that exceeds the $5.45 million threshold is taxed.

For married couples, the estate tax only kicks in on inheritance greater than $10.98 million. That means Trump's own children, for example, would stand to benefit mightily if the estate tax is repealed.

The next casualty of the tax plan would be the "Alternative Minimum Tax."

The AMT was created back in 1969 in order to ensure that rich people, like Trump, could not deduct their way out of paying taxes. At the time, those who earned more than $200,000 were able to avoid paying any federal income taxes, thanks to deductions.

The AMT impacts roughly 5 million tax filers in the U.S., according to the Brookings Institution — one of those filers being Trump himself.

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States that don't tax Social Security
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States that don't tax Social Security

Alabama

The state of Alabama doesn't tax Social Security benefits or traditional pension payments. Property owners in Alabama paid a median of just $556 in real estate taxes in 2015. The state sales tax rate is also a relatively low 4 percent, but there may be additional local sales taxes in some areas of the state. 

Photo credit: Getty 

Alaska

Alaska is the only state with no state income tax and no state sales tax. However, property taxes can be high. Homeowners paid a median of $2,979 for real estate taxes in 2015.

Photo credit: Getty

Florida

Year-round warm weather isn't the only perk of retirement in Florida. The state doesn't levy an income tax. Real estate taxes were a median of $1,733 across the state in 2015. The state sales tax rate is 6 percent. 

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Illinois

The state of Illinois allows retiree residents to subtract their Social Security income from their adjusted gross income. Income from federally qualified pension plans and IRAs is also generally exempt from state tax. But real estate taxes are high, costing homeowners a median of $4,101 in 2015. Shoppers also pay a 6.25 percent sales tax on many purchases. 

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Mississippi

Pension and annuity payments and income from Keogh plans and IRAs are generally exempt from state tax in Mississippi, and income from Social Security is also not subject to taxation. Median real estate taxes were just $877 in 2015. However, Mississippi has a relatively high state sales tax rate of 7 percent. 

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Nevada

The casinos and nightlife could be what draws you to Nevada, but you might stay for the low tax rates. Nevada doesn't have a state income tax. The median real estate tax bill was $1,529 in 2015. The state sales tax rate is 6.85 percent. 

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New Hampshire

The only forms of income New Hampshire taxes is dividends and interest. There is also no state sales tax. Property taxes, however, are among the highest in the country. Homeowners paid a median of $5,349 for real estate taxes in 2015. 

Photo credit: Getty

Pennsylvania

Social Security benefits are not included in taxable income in the state of Pennsylvania. Distributions from 401(k)s and similar types of workplace retirement accounts and IRA withdrawals taken after age 59 1/2 are also generally exempt from state income tax. But retirees will have to pay a 6 percent sales tax on their purchases. The median property tax bill was $2,671 in 2015. 

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South Dakota

South Dakota is another state that doesn't have an income tax. Property owners paid a median of $2,025 for real estate taxes. There's also a state sales tax of 4.5 percent. 

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Tennessee

Dividends and interest are the only forms of income that are taxable in Tennessee, and taxpayers age 65 or older with low incomes are exempt. But watch out for the 7 percent sales tax. Homeowners also paid a median of $1,099 in real estate taxes. 

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Texas

There is no state income tax in Texas, but the state raises revenue in other ways. Property owners faced a median of $2,755 in real estate taxes in 2015. There's also a 6.25 percent sales tax applied to many purchases. 

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Washington

Washington state won't tax your income, but it will tax your property. Homeowners paid a median of $2,895 for property taxes in 2015. There's also a 6.5 percent sales tax. 

Photo credit: Getty 

Wyoming

Wyoming doesn't levy an income tax. The sales tax is a relatively low 4 percent. Property taxes were a median of $1,256 in 2015. 

Photo credit: Getty 

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In fact, according to Trump's 2005 tax filing that was leaked in March, the AMT was the reason why Trump paid a majority of his taxes. Without it, Trump would have paid $5.4 million in tax in 2005 — an amount that came to just under 4% of his income that year. The AMT forced Trump to pay another $31 million in taxes in 2005, or roughly $25.33% of his 2005 income.

Treasury Secretary Steve Mnuchin, who helped preview Trump's tax plan, refused to answer how much Trump stands to benefit personally from this tax plan.

Mnuchin also added that Trump doesn't plan to release his taxes, saying Trump "has given more financial disclosure than anybody else" — a bafflingly false statement given that Trump is the only president in more than 40 years to not willingly release his tax returns.

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