TRUMP PROPOSES BUG TAX OVERHAUL
Sweeping changes of income tax code are most in 30 years.
President Donald Trump unveiled the most sweeping overhaul of the federal tax code in three decades, say- ing it would “make the tax code simpler and more fair for everyday Americans” while simultaneously slashing taxes on corpora
tions and individuals. Calling a revision in the tax code “a once in a generation opportu
nity,” Trump said Wednesday his plan “is a revolutionary change,
and the biggest winners will be the everyday American workers as jobs start pouring into our coun- try, as companies start competing for American labor, and as
wages start going up at levels that you haven’t seen in many years.”
In a speech in Indianapolis, Trump castigated the current tax code as a “relic” and “a colossal barrier standing in the way of American’s economic comeback.” He denounced the code, which
has not been overhauled since 1986, as “outdated, complex and extremely burdensome.”
Trump’s speech was a shot of adrenalin to a Republican Party dispirited by its failure this year to scrap the 2010 health law known as Obamacare and replace it with a more market oriented system.
Republicans such as Sen. Rob Portman of Ohio and Columbus-area Rep. Pat Tiberi of Genoa Township hailed the plan. At a news conference on Capitol Hill with House Speaker Paul Ryan of Wisconsin and other Republicans, Portman said, “this is going to give people the opportunity to have a healthier family budget.”
By contrast, Democratic reaction ranged from cau
tion to outright hostility. Rep. Tim Ryan, D-Niles, assailed the plan as “the same supply-side, trickle-down economics that has failed Amer- ican families for decades.”
In addition, critics warned that without restraints on federal spending, the plan would increase the swollen federal deficit. The Commit- tee for a Responsible Federal Budget in Washington calculated that Trump’s plan could add as much as $2 trillion in fresh federal debt during the next decade at a time when the government is already expected to add $10 trillion in publicly held debt during the same time span.
“Tax cuts shouldn’t be handed out like Halloween candy,” said Maya MacGuin- eas, president of the CRFB. “Deficit-financed tax cuts are a recipe for a short-term eco- nomic sugar high followed by sluggish long-term growth.”
In a conference call with Ohio reporters, Sen. Sher- rod Brown, D-Ohio, said he would be willing to work with Republicans to produce a bipartisan tax bill. But he warned he would “not vote for a bill that leaves the mid
dle class behind ... and blows a hole in the deficit.”
Critics also pointed out that while Trump outlined very specific new tax rates, he did not offer any details when he said would he would scrap “tax breaks and loop- holes.” Although the code is littered with tax breaks for companies and individuals, a number of deductions, such as charitable contributions and state taxes, are popular with many voters.
Trump did not even men- tion the most popular tax break of all which allows Americans to deduct the
interest on their home mortgages. Most analysts believe Congress would not tamper with that tax break.
T he pla n , which is expected to be drafted by Republican-controlled congressional committees, would scrap the current seven income tax brackets for individuals and replace them with three – 12 per- cent, 25 percent and 35 percent. Trump left open the possibility a fourth rate for high-income people could be added.
Because many middle-income Americans pay more in payroll taxes than income taxes, the plan would give t hem a tax cut by doubling the standard deduction. A married couple filing jointly would not pay any federal income tax on the first $24,000 of their annual income and single people would not pay any federal tax on their first $12,000.
The proposed plan would reduce the corporate income tax from 35 percent to 20 percent while creating a 25 percent tax rate for what is known as pass-through entities. A pass-through entity is usually a family business or partnership in which peo-
ple pay taxes on their personal income as opposed to the corporate rate.
The plan also would abolish the estate tax, which only impacts the wealthiest of families. Currently, people only pay estate taxes when
the estate is larger than $5.4 million.
Trump also offered a pet favorite of many large companies when he proposed a one-time low tax rate for profits that multi-national U.S. companies keep abroad as a way to avoid paying the current 35 percent corporate tax rate. He urged Democrats to
join Republicans in approving a bill, saying “tax reform has not historically been a partisan issue — and it does not have to be a partisan issue today. Democrats and Republicans in Congress should come together finally to deliver this giant win for the American people and begin the middle class miracle once again.”
But Ryan of Niles dismissed that possibility, charging that Trump and congressional Republicans “have no interest in real, bipartisan reform that will help everyday Americans.”
Tiberi, a senior member of the tax-writing House Ways and Means Committee, said the proposed plan “will help all Americans, especially those who have felt left behind in the slow and uneven economic recovery of the past decade.”
“We will simplify the code, make it easier for everyone to file their taxes, and allow middle-income Americans to keep more of their pay
checks so they have the confidence and ability to save, plan for the future and get ahead,” said Tiberi.