White House releases Trump tax reform plan
WASHINGTON — Racing to convey a sense of momentum to President Donald Trump’s sluggish legislative agenda, the White House unveiled a plan for what it called “one of the biggest tax cuts in American history” Wednesday, just ahead of the administration’s symbolic first 100 days in office.
The one-page outline, touted as an overhaul of the tax code, bears the hallmark of other early Trump proposals: a broad-brush overview of bold goals that is intended to serve as an opening bid with Congress rather than a fully baked policy proposal.
The plan was immediately met with skepticism from budget groups and faces a daunting future on Capitol Hill. Lawmakers from both parties are wary that the White House hasn’t said how it would pay for the cuts, which likely would provide the greatest benefits to higher-income earners and corporations.
At its center is a large reduction in corporate tax rates, to 15 percent — from multinational corporations to mom-and-pop shops. The current U.S. corporate tax rate is 35 percent, the highest among developed economies, but many companies pay a lower rate by using deductions in the tax code.
The plan also reduces the number of personal income tax brackets from seven to three, with rates of 10 percent, 25 percent and a top rate of 35 percent.
The outline released by the White House lacks many basic details, including income requirements pegged to new tax brackets, any explanation of a new tax break for childcare expenses, or any analysis of how much it would increase the national debt.
Among the deductions it would eliminate would be one for the payment of state and local taxes. That would be a big hit to Californians and residents of other states with high taxes and high earners.
The proposal also would eliminate the inheritance tax on multimillion-dollar estates and cut a 3.8 percent tax on investment income imposed as part of Obamacare.
It would eliminate the alternative minimum tax, a backstop intended to prevent the highest earners from using deductions and other strategies to avoid paying substantial taxes. The alternative minimum tax increasingly forces uppermiddle-class earners to pay more taxes because it doesn’t adjust for inflation.
It also would impose an undefined one-time tax on corporate profits held overseas in an attempt to bring the money back to U.S. operations.
In an attempt to simplify, the plan would eliminate most deductions used by higher earners, but would preserve those for charitable giving and home loans, among the costliest and most popular. It would also double the standard deduction, meaning married couples would not pay taxes on their first $24,000 in income.
“This tax reform package is about growing the economy, creating jobs,” said Gary Cohn, director of Trump’s National Economic Council, who presented the plan at the White House briefing with Treasury Secretary Steven T. Mnuchin.
The plan is sure to meet resistance and refinement on Capitol Hill, among Democrats who oppose heavy tax breaks for high earners and corporate interests, Republicans who worry about the deficit, and lobbying interests concerned with the potential loss of favored deductions.
Democrats and some outside groups also complained that the proposal would chiefly benefit wealthy Americans like Trump personally, rather than middle-class wage earners.
In response to a question, Mnuchin said Trump had no intention of releasing his tax returns, further slamming the door on a dispute that has persisted since the campaign, when the billionaire businessman became the first major presidential candidate since the 1970s to refuse to let voters see how much he pays in taxes and details about his business deals and investments.
But Trump and his advisers cast it as a historic and longoverdue opportunity to rewrite tax laws that have grown increasingly complicated since the last major rewrite in 1986 under President Ronald Reagan.
“This isn’t going to be easy.
Doing big things never is,” Cohn said. “We will be attacked from the left and we’ll be attacked from the right, but one thing is certain: I would never, ever bet against this president. He will get this done for the American people.”
If the plan does not pay for itself, it would need support from at least some Democrats under current Senate rules. Some were quick to denounce it on Wednesday.
Sen. Ron Wyden of Oregon, the top Democrat on the Finance Committee, called the proposal “an unprincipled tax plan that will result in cuts for the 1 percent, conflicts for the president, crippling debt for America and crumbs for the working people.”
Republican leaders in the House have worked for years on their own plans, which now include a smaller tax break for companies — a drop to 20 percent for corporations and a maximum of 25 percent for pass-through companies.