WASHINGTON – Just shy of President Trump’s 100th day in office, his administration unveiled tax reform Wednesday that is slated to be the “biggest tax cut” in American history, geared at job creation and putting more money in the pockets of middle-class Americans.
White House chief economic advisor Gary Cohn and Treasury Secretary Steve Mnuchin outlined the plan in a press briefing at the White House.
“What this is about is creating jobs and creating economic growth. And that’s why massive tax cuts and massive tax reform and simplifying the system is what we’re going to do,” Mnuchin told reporters in the White House briefing room.
The centerpiece of the tax plan would be a drastic cut from the business tax rate, from the current rate of 35 to 15 percent, which would apply to small businesses, corporations and large owner-operated conglomerates, like Trump’s real estate empire.
“We are now one of the least competitive countries in the world when it comes to corporate tax. So tax reform is long overdue,” Cohn said.
Mnuchin assured that the proposal was not intended to aid the wealthy, even though it lowers rates for top earnings.
Both individual and corporate income tax rates would be sharply reduced under the tax plan. The number of individual tax brackets would be reduced to three – 10 percent, 25 percent and 35 percent.
In an effort to fulfill his promises to provide tax cuts for middle-income Americans and simplify the process of filing returns, the administration would double the standard deduction, which reduces an individual’s taxable income and would eliminate some common tax deductions like those used to offset state and local taxes.
Married couples who file jointly, under the proposal, would not owe income taxes on on the first $24,000 of their earnings.
Parents who pay for day care will be afforded more tax benefits. Families paying for child and dependent-care costs will be afforded increased tax benefits, Mnuchin explained, without providing detail.
Lower-income households would be exempt from taxes, and there would be relief – still undefined – for families with child care expenses.
The estate tax, also known as the death tax, which Trump has boisterously opposed for years, would be eliminated under his plan, as would be the alternative minimum tax.
House Republicans are calling for a border adjustment tax to be incorporated in the plan. The White House is not on board with the proposal, but the administration expressed broad support for switching to a “territorial tax system” that would exempt company earnings abroad from taxation, while encouraging companies to maintain their headquarters in the United States.
Cohn reassured during the briefing that Trump will make good on his promise to provide some tax relief to Americans.
“I would never, ever bet against this president. He will get this done for the American people,” Cohn said. “He understands that there are a lot people who work hard and feel like they’re not getting ahead.”
The White House will formally begin the push to overhaul the tax code before the end of the year.
Eager to obstruct President Trump’s agenda, top Democrats are accusing the administration of blueprinting a plan that is merely intended to benefit the rich.
Sen. Ron Wyden, the ranking Democrat on the Senate Finance Committee, claimed the administration’s boost to the economy will be damaging.
“This is an unprincipled tax plan that will result in cuts for the one percent, conflicts for the president, crippling debt for America and crumbs for the working people,” Wyden said in a statement.
He charged that Trump is “piling on” conflicts of interest.
Democratic Party chairman Tom Perez charged the president with designing a tax plan that will benefit the Trump estate.
“Trump’s latest proposal is another gift to corporations and billionaires like himself,” he claimed.
Republicans, who long have called for sweeping and permanent changes to the tax code, are proponents of the White House’s plan, agreeing it will be instrumental in stimulating the economy and fostering job growth.
“I think there’s 80 percent or more common ground here – we’ve got some work to do,” said Rep. Kevin Brady, Republican of Texas and the chairman of the Ways and Means Committee. “I think the president is going bold here.”
Senate Majority Leader Mitch McConnell, R-Ky., House Speaker Paul Ryan, R-Wis., Senate Finance Committee Chairman Orrin Hatch, R-Utah, and House Ways & Means Committee Chairman Kevin Brady., R-Texas, issued the following joint statement following the tax reform announcement, calling the framework points “critical guideposts” for tax reform this year.
“The principles outlined by the Trump administration today will serve as critical guideposts for Congress and the administration as we work together to overhaul the American tax system and ensure middle-class families and job creators are better positioned for the 21st century economy,” the statement said.
“Lower rates for individuals and families will allow them to keep more of their hard-earned money and empower them to invest more in their future. Getting tax rates down for American companies, big and small, will create new jobs and make the United States a more inviting place to do business. 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.”