The framework also gives Congress the option of creating a higher, fourth, rate above 35 percent to ensure that the rich are paying their fair share. But it does not specify what income levels would be associated with the higher rate, what that new rate might be or explicitly direct Congress to implement a fourth bracket.

?The plan aims to simplify and cut taxes for the middle class by doubling the standard deduction to $12,000 for individuals and to $24,000 for married couples. That would allow people to avoid a complicated process of itemizing their taxes to claim various credits and deductions. It would also increase the child tax credit from $1,000 to an unspecified amount and create a new $500 tax credit for dependents, such as the elderly, who are not children.

Provisions such as the alternative minimum tax and the estate tax, a tax on inherited wealth which Mr. Trump has derided over the years, would be gone under the Republican proposal. Most itemized deductions, including those widely used for state and local tax expenses, would also be eliminated. However, the plan would preserve the deductions for mortgage interest expenses and charitable giving and keep incentives for education and retirement savings plans.

Eoin Treacy's view

A point Jeff Gundlach made yesterday is that the only way the Trump tax plan can remain revenue neutral is to remove the state and local tax deductions. That is primarily a challenge for high income earners in high tax states like California and New York which are also the most populous states. That represents a major challenge in getting this legislation passed. It’s certainly not impossible but neither should we ignore the challenge in getting these proposals passed. 

The Russell 2000 Index broke out emphatically to new highs, not least because it represents a substantial number of companies that pay the high US corporate tax rate. A clear downward dynamic would be required to question medium-term scope for additional upside.