National Economic Council Chair Gary Cohn and Treasury Secretary Steve Mnuchin unveiled a blueprint of US President Donald Trump's new tax plan, touted as the ‘biggest tax cut in history', during a press briefing at the White House on Wednesday (26 April). Trump, who completes 100 days in office in another couple of days, had promised radical tax reforms during his campaign.
The proposed plan envisages:
- Trimming the number of individual income tax brackets to just three: 10 per cent, 25 per cent and 35 per cent
- Cutting the top individual rate from 39.6 per cent to 35 per cent
- Doubling the standard deduction, which could potentially ease the tax burden on millions of Americans by stamping out taxes on the first $24,000 of a couple’s earnings
- Eliminating most itemised tax deductions though retaining the much favoured deductions provided for mortgage interest and charitable donations
- Withdrawal of estate tax and alternative minimum tax
- Abolishing the 3.8-per cent tax on investment income imposed by former president Barack Obama to fund Obamacare
- Cutting the corporate tax rate by more than half, from 35 to 15 per cent
- Territorial tax system to level the playing field for American companies
- One-time tax on trillions of dollars held overseas
White House memo on Trump's proposed tax plan also gives broad indication on how the administration plans to take forward the proposal. The memo states that "Throughout the month of May, (the administration) will hold listening sessions with stakeholders to receive their input and will continue working with the House and Senate to develop the details of a plan that provides massive tax relief, creates jobs, and makes America more competitive — and can pass both chambers."
The White House did not provide any details on how it plans to address the deficit that may arise out of the proposed tax breaks. Supporters of the new tax proposal claim that debt would eventually “pay for itself” through economic growth that tax breaks will spur.
Trump's opponents reacted predictably to the proposal. The New York Times quoted Tom Perez, chair of the Democratic Party as saying, "Trump’s latest proposal is another gift to corporations and billionaires like himself".