Trump proposes biggest US tax overhaul in 3 decades, stirs concerns on deficit
US president Donald Trump and Republican leaders unveiled on Wednesday the most sweeping tax changes in decades, slashing rates for both businesses and individuals in the hopes of turning around their dismal record in pushing their legislative agenda, including failure to repeal and replace Obamacare, their pet peeve.
The top corporate tax rate would drop, according to the proposal, from 35% to 20%, the top highest rate for individual payers comes down from 39.6% to 35% and tax brackets for others shrink from seven to three — 12,%, 25% and 35%, with the possibility, left undefined still, of a fourth.
The plan, which experts said proposed changes of the magnitude last done in the late 1980s, also raised standard deductions and child credits and eliminated minimum alternate tax — a supplemental tax designed to offset benefits accruing from deductions and reliefs — and estate tax.
“This is a once-in-a-generation opportunity, and I guess it’s probably something I can say that I’m very good at,” the president said in Indianapolis at a rally touted as a tax-reform event. “I’ve been waiting for this for a long time.”
“We’re going to cut taxes for the middle class, make the tax code simpler and more fair for everyday Americans, and we are going to bring back the jobs and wealth that have left our country -- and most people thought left our country for good.”
The president went on to say he expected Democrats and Republicans in Congress to come together, “finally, to deliver this giant win for the American people and begin middle-class miracle -- it’s called a middle-class miracle, once again”, and added he was confident of finding support from Democrats.
But that will be easier said than done. Democrats plan to stand as a block in opposition to the tax revamp, as they have on most legislative issues to stymie the president, such as the repeal and replacing of Obamacare, which has been defeated by opposition within the Republican party, already beaten into a corner by unified Democrats.
“Each of these proposals would result in a massive windfall for the wealthiest Americans, and provide almost no relief to middle-class taxpayers who need it most,” Chuck Schumer, leader of Senate Democrats said on the floor of the body. “It seems like President Trump and Republicans have designed their plan to be cheered in the country clubs and the corporate boardrooms.”
The conservative-leaning Wall Street Journal welcomed the new plan, saying in an editorial, “Overall, the GOP has produced a tax-reform outline that can revitalise a weak economic expansion, lead to more new business creation, enhance worker productivity, and lift wages.” A thumbs up, in short.
The New York Times concluded, also in an editorial, the framework was “a wish list of tax cuts for the wealthy” and that it would “greatly increase the federal deficit, would not turbocharge economic growth and could leave many middle-class families worse off by ending deductions they rely on.” A thumbs-down, clearly.
The non-partisan Committee for a Responsible Federal Budget estimated that the nine-page “unified framework” plan called for about $5.8 trillion in tax cuts offset by $3.6 trillion in revenue-raising provisions; that leaves a net cut of $2.2 trillion.