Developed over months and in tandem with Trump’s White House, the sweeping new plan calls for the US corporate tax rate to be cut from 35 to 20 percent — to below the 22.5 average of the industrialized world, it says.
Trump dismissed the existing tax code as a “relic” that impedes economic expansion, and called the Republican plan “the largest tax cut, essentially, in the history of our country.”
“I’ve been waiting for this for a long time,” Trump said in a speech in Indianapolis.
Cutting corporate taxes, he said, “is a revolutionary change, and the biggest winners will be middle class workers as jobs start pouring into our country, as companies start competing for American labor, and as wages continue to grow.”
For households, the Republican plan cuts the number of tax brackets from seven to three, with a maximum rate of 35 percent, against 39.6 at present, although the plan also mentions the “potential” for an additional top rate for the highest-income taxpayers.
House Speaker Paul Ryan unveiled the plan, framing it as a now-or-never moment, with Republicans hoping it will be passed into law by year’s end.
“This is a once-in-a-lifetime opportunity that is all about more jobs, fairer taxes and bigger pay checks for American families.”
US lawmakers last implemented major tax reform in 1986. “Hardworking families and small businesses cannot afford to wait any longer,” Ryan said.
The plan also seeks to encourage firms to bring back profits that have accumulated abroad by offering a one-time, low tax rate on wealth brought back from overseas.
Overhauling the tax system has long been a political Holy Grail for the Republican Party.
It was also a major Trump campaign pledge, and has taken on extra importance after his efforts to enact promised health care reform and build a border wall stalled.
Exactly how to pay for the tax breaks was not clarified in the plan.
Opposition Democrats savaged the reform proposal as a “perverse” system for rewarding the wealthy, and called out Trump for failing to help working and middle-class American families.
Senate minority leader Chuck Schumer told reporters that while Trump has “talked the talk” on tax reform by aiming the benefits at the middle class, “he ain’t walking the walk.
“This is aimed at the wealthiest people in America, they do far and away the best” under the proposal, Schumer said.
– ‘Economic stimulus’ -With Republicans licking their wounds one day after their latest Obamacare repeal effort collapsed, and hours after a Trump-backed senator lost a run-off race to a hardline conservative who has threatened to upend the Republican establishment, the party embraced the opportunity to roll out another top priority item.
The president and his party want to simplify the thousands-of-pages-long US tax code — to enable Americans to fill out their return on a postcard, runs the refrain.
That involves the elimination of countless loopholes and deductions.
Under the Republican plan, only two highly popular deductions are explicitly protected: for interest paid on home mortgages and for charitable contributions. Lawmakers will hammer out precisely which deductions will survive under the reform in the coming months.
Inheritance tax, or estate tax, would be scrapped altogether — a longstanding demand of Republicans who refer to it as the “Death Tax.”
Schumer said abolishing the estate tax would contribute to ballooning the federal deficit by awarding a $269 billion tax break to the richest 0.02 percent of Americans.
Ultimately the framework unveiled by Ryan “will add anywhere from $5 to $7 trillion to our deficit,” Schumer said.
The prospects for passage of tax reform this year remained up in the air.
“I think we can, but we will need to have some Democrat help,” said Senate Finance Committee chairman Orrin Hatch.
“I think we’ve got to put aside the differences and start working together,” he said.
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