Trump's business tax cut seen as major boon for top 1%
WASHINGTON - Despite President Donald Trump’s statement this month that “the rich will not be gaining at all,” the tax plan that the White House and Republican leaders rolled out may contain more than $1 trillion in breaks for the highest earners and the wealthy - at least without revenue offsets that remain largely unspecified.
“This is a huge tax cut for the top one per cent,” Leonard Burman, Director of the Urban-Brookings Tax Policy Centre, said on Wednesday after details of the plan emerged. “Impossible to square with the president’s rhetoric.”
The tax framework sets up some suspense over where Congress will set the top individual income-tax rate - giving lawmakers flexibility to set it higher than the 35% mentioned in the document.
But another provision, which would slash the rate paid by owners of partnerships and limited-liability companies, is seen as a potential bonanza for people at the top of the income scale. The framework calls for capping the tax rate on such pass-through businesses at 25%. Businesses organised that way don’t pay income tax themselves, instead passing earnings to their owners, who pay at their individual rates. Owners with high business incomes, who currently face a top rate of 39.6%, are in for major tax relief, policy analysts said.
In describing the newly proposed tax rate, the framework cites its impact on “small and family-owned businesses,” but pass-through entities range from mom-and-pop grocers to major, closely held businesses, including Trump’s companies.
The tax plan is “not good for me, ”,Trump said on Wednesday during a speech in Indianapolis to rally support. news24