Trump tax plan

Pitches reform to Congress

President Trump on Wednesday pitched a sweeping, historic tax overhaul that would slash taxes for businesses big and small, cut popular deductions, simplify the system and, he claims, let most taxpayers keep more of their money.

The president, speaking in Indianapolis, described the plan prepared by a Big Six group of Republicans as “pro-growth, pro-jobs, pro-worker, pro-family and, yes, tax reform that is pro-American.”

“Under our framework, we will dramatically cut the business-tax rate so that American companies and American workers can beat our foreign competitors and start winning again,” Trump said.

The corporate tax would be sliced to 20 percent from 35 percent, while the small-business tax would be capped at 25 percent rather than the individ- ual rates of the owners.

“This will be the lowest top marginal income-tax rate for small and mid-size businesses in more than 80 years,” he said.

Trump argued that the middle class would be the biggest winners, as companies would create thousands more jobs with their expected windfall from corporate tax cuts.

“We will reduce the corporate tax rate to no higher than 20 percent, which is substantially below the average of other industrialized nations,” Trump said.

But top earners would also see a big cut in their rates, from 39.6 to 35 percent, and the president also wants to eliminate the estate tax, which affects just 0.2 percent of the population.

He also vowed to work with Democrats to deliver what he called the “middle-class miracle” by helping businesses create more jobs.

“Tax reform has not historically been a partisan issue — and it does not have to be a partisan issue today,” Trump said.

“I really believe that we are going to have numerous Democrats come over and sign, because it’s the right thing to do.

“Democrats and Republicans in Congress should come together, finally, to deliver this giant win for the American people that’s called the middle-class miracle.”

The plan would simplify the tax code by eliminating the alternative minimum tax and most itemized deductions, roughly double the standard deductions for individuals and couples and reduce the number of tax brackets from seven to three.

But the nine-page outline released by the White House did not list income ranges for the new brackets — 12, 25 and 35 percent.

Currently there are seven brackets: 10, 15, 25, 28, 33, 35 and 39.6 percent.

The proposal left it up to Congress to enact a fourth new bracket to ensure that the rich pay their fair share. The GOP’s plan would:

Cut the corporate tax rate, a move the administration argues would free up capital so that corporations could create more jobs.

Double the standard deduction to $12,000 for individuals and $24,000 for families, increasing the amount of personal income that is tax-free.

Eliminate the federal deduction for local and state taxes, a move that would hit high-tax blue states like New York, New Jersey and Connecticut the hardest.

Maintain deductions for mortgage interest and charitable donations.

Retain existing tax benefits for college and retirement savings such as 401(k) contribution plans.

Business groups enthusiastically backed the plan.

“This plan would provide muchneeded relief for corporations, small businesses and middle-class individuals alike, and would help draw foreign capital and investment to the United States. This is the framework we need to unlock job creation and economic growth,” National Retail Federation CEO Matthew Shay said.

But Democrats swiftly condemned the framework as a giant tax cut for the rich.

“Each of these proposals would result in a massive windfall for the wealthiest Americans and provide almost no relief to middle-class taxpayers who need it most," Senate Minority Leader Chuck Schumer (D-NY) said, adding that there was no evidence that huge corporations would create more jobs with the windfall.

The political stakes are high for Republicans and for Trump, whose agenda has largely stalled as the GOP abandoned efforts to repeal ObamaCare, made little progress on the border wall and has yet to craft infrastructure legislation.

Republicans see tax overhaul as a once-in-a-generation opportunity that could produce a large political payoff.

There are no specifics yet on how much the plan would cost, but experts at the Tax Foundation put the tax cuts in the range of $5 trillion over the next 10 years.

The net cost to the federal debt would be far less — probably in the range of $1.5 trillion under a deal put together by Senate Budget Committee Republicans.

The real battles will come as lawmakers quarrel over which tax breaks might be eliminated to help pay the balance.

One battle is already brewing over the move to eliminate the deduction for state and local taxes.

New York GOP Reps. Peter King and Dan Donovan are on record opposing that cut, and Gov. Cuomo railed against it Wednesday as well.

But in a boost for House GOP leaders, the conservative Freedom Caucus endorsed the framework, calling it “a forward-looking taxreform framework that will let hardworking Americans keep more of their money.”

Plenty of work remains as Republicans try to turn their ideas into law over the next few months.

The detailed work will happen in the tax-writing committees in Congress, where Republicans have narrow margins, while interest groups that would lose cherished tax breaks are already fighting back.

Democrats rushed to denounce the Republican tax-reform framework on Wednesday — as they were bound to denounce any plan that aims to deliver the “jobs, jobs, jobs” President Trump has promised.

The US economy needs strong medicine to break out of the slow-growth “new normal” it’s been trapped in since the Great Recession. That has left Wall Street and the rich doing fine, but Main Street and everyone else struggling.

The Big Six — Trump’s top two economic advisers, the House and Senate leaders and the two chairmen of Congress’ tax-writing committees — have now outlined just the medicine.

It includes corporate-tax reform to finally make US rates competitive with those of other developed nations, along with changes for other businesses to put them on a fair footing with corporations, plus revision of the personal income-tax code to put more money in middle-class pockets.

Simplification of the code will also make it less maddening to actually do your taxes as well as ending some blatant inequalities.

Such as the deduction for state and local taxes. Its main direct beneficiaries, after all, are high-earners in high-tax states. (The framework’s lower rates and nearly doubled standard deduction ensure that non-fat-cats in those states still come out ahead.)

Looked at another way, the deduction’s a subsidy to the governments of those states — even though New York, California, New Jersey, etc. are much wealthier than average. It’s the loss of this giveaway that has Gov. Cuomo screaming doomsday.

All that said, the framework leaves it to Congress to fill in key details in the normal legislative process. That means a lot of intense work over the next two months to get a bill passed by year’s end, with Democrats doing their best to gum up the works all the way.

If Republicans can’t stick together and get this job done, they’ll find it awfully hard to get their voters back to the polls.