Trump hails ‘historic’ tax cuts to put US back to work

President to offer reduced rates to households on $60,000 and relief on child care expenses

THE White House unveiled plans yesterday for one of the “biggest tax cuts in American history”, slashing rates for both businesses and low and middleincome families.

With President Donald Trump about to chalk up 100 days in office, he said: “It’s a great plan. It’s going to put people back to work.”

Democrats criticised the move for failing to explain how the government would make up the shortfall it would leave in its budget.

Steve Mnuchin, the treasury secretary, confirmed the plan included Mr Trump’s promise to reduce tax for corporations from 35 per cent to 15 per cent, and said the relief would also apply to smaller businesses.

The plan includes a dramatic overhaul of the country’s labyrinthine tax code, reducing the system to three simple tax brackets – 10 per cent, 25 per cent and 35 per cent.

Americans have been forced to spend “billions of hours” every year on tax returns, said Gary Cohn, Mr Trump’s national economic director.

The reforms represent a return to the “trickle-down economics” of the Reagan era which holds that lowering taxes spurs economic growth.

George H W Bush, the former president, once dismissed the theory as “voodoo economics”. Mr Mnuchin said the plan would pay for itself by unleashing the power of the free market and closing tax loopholes.

Democrats have dismissed the plan as “mathematically impossible” and some Republicans have said they may not support the reforms.

Democrats also called for Mr Trump to release his own tax returns to see if he might benefit. But Mr Mnuchin said: “The president has no intention.”

It also emerged that Mr Trump was studying a draft executive order to cancel the North American Free Trade Agreement.

DONALD TRUMP offered relief for the American middle class as part of what the White House called the “biggest tax cut in history” as he approached 100 days in office.

The US president’s sweeping and ambitious tax reform plan met a campaign promise to reduce taxes and was expected to be widely welcomed by middle-income earners who backed him in the election.

“It’s a great plan. It’s going to put people back to work,” Mr Trump said.

Asked what the announcement would mean for a family on $60,000 (£47,000) a year, Gary Cohn, director of Mr Trump’s National Economic Council, said: “It means a tax cut.”

He added: “We will continue to give you more details as we have them. We have a once-in-a-generation opportunity to do something really big.”

The plan included a doubling to $24,000 (£19,000) of the amount a married couple could earn before being taxed.

Mr Cohn said: “In essence we are creating a zero tax rate, yes, a zero tax rate, for the first $24,000 a couple earns. Families will benefit from tax relief that will help them with child and dependent care expenses.”

Middle-class taxpayers would also benefit from a simplification of the tax code, he said.

Seven individual tax brackets will be reduced to three – 10 per cent, 25 per cent and 35 per cent.

Mr Cohn said far fewer taxpayers would need to itemise deductions so they could go back to filing their returns on one simple page rather than the current system which was too complicated for many to understand.

Amid the warnings that the cuts would lead to ballooning deficits, Mr Cohn and Steve Mnuchin, the treasury secretary, said they would be paid for by economic growth, with an annual rate of three per cent being “very achievable”. Reducing tax deductions and closing loopholes would also help pay for it, they said.

Mr Cohn said: “Job creation and economic growth is the top priority of the administration. This is about growing the economy and growing jobs.”

Mr Mnuchin said: “The debt went from $10 to $20 trillion in the last administration. The Trump plan will grow the economy and create massive amounts of revenues, trillions of dollars. We are at a historic moment.”

The plan also included slashing corporation tax from 35 per cent to 15 per cent, and abolishing the death tax.

Mr Mnuchin said: “Our objective is to make US businesses the most competitive in the world.”

Republicans in Congress welcomed the plan, but as a starting point with room for negotiation.

$24,000 The amount that could be earned by a couple before they are taxed under Donald Trump’s new plans

Orrin Hatch, the chairman of the Senate finance committee, said: “I actually believe it could stimulate the economy. Now, whether 15 per cent is the right figure or not for corporate tax – that’s a matter to be determined.”

Democrats attacked the plan as one that would benefit the rich.

Chuck Schumer, the Senate Democratic leader, said: “If the president’s plan is to give a massive tax break to the very wealthy in this country, a plan that will mostly benefit people and businesses like President Trump’s, that won’t pass muster with Democrats.”

The Committee for a Responsible Federal Budget, a group focused on reducing deficits, said Mr Trump’s tax plan was more likely to increase growth by 0.2 percentage points, rather than higher estimates made by the White House. Editorial Comment: Page 17

SIR – Theresa May would be very wise to avoid putting too many tax targets in the manifesto (report, April 25).

The ups and downs which Brexit will inevitably cause over the next four years mean that the Government will need financial flexibility, and it will not have this if its hands are tied by such pledges. Those promises made by David Cameron in 2015 have already caused problems for the current Chancellor. A pledge to raise the Personal Allowance again, thereby taking less affluent people out of taxation, would be welcomed by all and benefit the “just about managing” whom the Prime Minister particularly wishes to help. Patricia White North Shields, Northumberland

SIR – Regardless of which party has a majority in the House of Commons come June 9, taxation has to rise.

In the past two decades we have had two Chancellors of the Exchequer whose aim was to make life difficult for a successor. Gordon Brown could not afford his reduction in the standard rate of income tax from 22p to 20p. George Osborne was so certain of failure in the last election that he saddled himself, and consequently Philip Hammond, with a string of unaffordable commitments.

While money is not the only thing that the education sector, elderly care and the NHS require, the public nevertheless expects to see increased funding for these areas. Above all there must be a massive increase in defence expenditure to make up for decades of ill-directed cuts. Stephen Garner Langham, Essex

SIR – The timing of the general election is unfortunate, since the impact of the county council elections – and, in some areas, the metro mayor elections – has been significantly reduced as a result. They have received little coverage in national or regional news.

These local elections, on May 4, can have more relevance to the electorate than national polls, particularly in more rural areas. David Percival Bitteswell, Leicestershire

SIR – June 8 is a suitable date for the daughter of a vicar to call a general election. On St Médard’s feast day the most exemplary girl in the neighbourhood was escorted to the church, crowned with roses, and given a purse of money. Sounds just right for the current First Lord of the Treasury. Philip Beddows London SW11