Trump proposes 15 pct business tax rate: White House summary
- Author: Zachary Reyes Apr 26, 2017,
Apr 26, 2017, 21:40
Mr. Trump sent his team to Capitol Hill on Tuesday evening to discuss his plan with Republican leaders.
Republican lawmakers generally greeted Trump's plan as a single viewpoint that will start negotiations in Congress and will ultimately be modified if it becomes law.
The individual tax bracket refers to the amount a taxpayer owes in federal income tax based on their income. During the campaign, Trump proposed exempting households from paying taxes on their first $15,000 in income, regardless of the type or size of the household. Depending on income, taxpayers will be subject to either a 12, 25 or 33 percent income tax rate under the House plan. It would also end a 3.8 percent net investment income tax that applies only to individuals who earn more than $200,000 a year, repeal the alternative minimum tax and eliminate the estate tax, which now applies only to estates worth more than $5.49 million for individuals and $10.98 million for couples. According to The Times, that could apply to the Trump Organization.
The centerpiece of Trump's earlier approach would have allowed parents to deduct the average cost of child care from their income taxes, a strategy that would have benefited families with a high level of income. A senior administration official told The Washington Post Tuesday that Trump's staff are trying to find a way to address those criticisms.
The tax cuts could be limited to a 10-year period, but Mnuchin said that would be less than ideal.
Republicans who slammed the growing national debt under President Barack Obama have said they are open to Mr. Trump's tax plan, even though it could add trillions of dollars to the deficit over the next decade.
In all, Trump has so far proposed minor changes to his plan from the campaign.
"The difference between 1.6 per cent, 1.8 per cent GDP and three percent is staggering", Mnuchin said.
A broader question is not how the plan would affect rich households as opposed to the poor, but what it would mean for the American economy overall.
Trump's tax plan does have an advantage over Ryan's and other plans, including those supported by some Democrats, that aim to make up the forgone revenue.
One thing Trump doesn't want: A border-adjusted tax, of the type proposed by House Speaker Paul Ryan. Economists say this growth effect is not supported by evidence from prior tax cut efforts. "We have a very uncompetitive system that's hindering the economy and jobs".
Criticism of global trade was paramount in Trump's appeal to voters, but the document released Wednesday does not answer basic questions about whether he would address this issue in terms of taxes.
The top tax rate for individuals would fall by a few percentage points, from 39.6 percent to the "mid-30s".
Instead of taxing corporations on income, the current tax scheme, the plan would tax their cash flow. The Republican proposal is known as a border adjustment.
One major company that would benefit from a lower corporate tax is Warren Buffett's Berkshire Hathaway Inc., which generates most of its revenue within the U.S.
The new document offers no information about how imports or exports would be taxed. "The plan will pay for itself with growth", Mnuchin said last week.
The move to tax partnerships, limited liability companies and other so-called "pass-throughs" at 15 percent would represent a major tax cut for many businesses - from mom-and-pop grocers to hedge funds - including Trump's own business empire.
"There's no doubt that business owners large or small want permanency", said Everson.
The Tax Policy Center projects that taxpayers exploiting this potential loophole could reduce the taxes the government collects by $2.6 trillion over 20 years.
Mr Trump is seeking approval for funding for his controversial wall between the U.S. and Mexico, which the department of homeland security estimates could ultimately cost more than $21 billion.
Lowering the rate on pass-through income could enhance the appeal of these businesses.