Although details associated with the anticipated White House tax plan have pervaded every corner of Washington for weeks, Treasury Secretary Steve Mnuchin on Wednesday revealed the “biggest tax cut” and “largest tax reform” proposal in America since 1986.
Details of the plan were outlined by Mnuchin and White House National Economic Council Director Gary Cohen at an afternoon press briefing. Reform proposals include: (a) a reduction of the corporate tax rate to 15 percent; (b) a reduction in the number of income tax brackets from seven to three; (c) an increase in deductions for middle-class taxpayers; (d) a decrease in deductions used by high-income individuals, including the elimination of federal write-offs of state and local taxes; (e) an elimination of the alternative minimum and estate taxes.
In a Wednesday morning speech, Mnuchin said that under President Trump’s plan both the White House and the Treasury Department expect to see economic growth in America rise to a sustained yearly rate of three percent.
The proposed tax cuts may be most appealing for corporate America: The current top rate for corporate taxes is 35 percent, the highest in the world and minimum 15 percent higher than most European countries. The current rate for the UK is 20 percent; Ireland boasts a 12 percent rate.
Trump’s outline also proposes a “territorial tax system” that would only impose rates on business done by U.S. companies in America, and not overseas transactions as the current tax code calls for.
Smaller business owners would also benefit: Taxed at a personal-income rate, Trump’s plan would apply the proposed 15 percent corporate rate to the self-employed.
Long in the cross hairs of conservatives, the plan would see a reduction in tax rates. The highest rate, which currently rests at 39 percent, would be lowered to 35 percent, and two lower brackets would be adjusted to 25 and 10 percent.
Further benefiting the middle class, Trump’s plan would increase the existing standard deduction by a multiple of two.
In a slight shock, Trump’s plan does not include a Border-Adjustment Tax (BAT). Declared to be off the table, a move certain to rile the GOP leadership, the tax on imports was described as not workable” in its current form.”
House Speaker Paul Ryan (R-Wis.) and Ways and Means Chairman Kevin Brady (R-Texas) had sought a BAT to offset revenue loss in the corporate-rate cut.
A joint statement released by Ryan and Brady, along with Senate Majority Leader Mitch McConnell (R-Ky.) and Finance Committee Chairman Orin Hatch (R-Utah) Wednesday said Trump’s plan “will serve as critical guideposts for Congress”.
“With an eye toward fairness and simplicity, we’re confident we can rebuild our tax code in a way that will grow our economy, better promote savings and investment, provide our job creators with a competitive advantage, and bring prosperity to all Americans,” the statement concluded.
[AP] [BBC] [CNNMoney] [Photo courtesy AP/Evan Vucci via Washington Times]