Trump plan would cut taxes for corporations – and people, too

Composite image. Foreground stock image. Background image Photo by BIG_TAU/iStock/Getty Images; St. George News

DISTRICT OF COLUMBIA (AP) — President Donald Trump proposed dramatic cuts in corporate and personal taxes Wednesday in an overhaul his administration asserts will spur national economic growth and bring jobs and prosperity to America’s middle class. But his ambitious plan is alarming lawmakers who worry it will balloon federal deficits.

President Donald Trump speaks at the Interior Department in Washington. The president is proposing dramatically reducing the taxes paid by corporations big and small in an overhaul his administration says will spur economic growth and bring jobs and prosperity to the middle class. Washington, D.C., April 26, 2017 | AP Photo by Carolyn Kaster, St. George News

The plan would reduce investment and estate taxes, helping the wealthy. But administration officials said several other tax breaks that help well-to-do taxpayers would be eliminated and the plan would largely help the middle class.

The White House has yet to spell out how much of a hole the tax cuts could create in the federal budget, maintaining that the resulting economic growth would eliminate the risk of a soaring government deficit— if not actually cause the red ink to diminish.

The outlined changes to the tax code are the most concrete guidance so far on Trump’s vision for spurring job growth and fulfilling his promise to help workers who have been left behind by an increasingly globalized economy.

“He understands that there are a lot people who work hard and feel like they’re not getting ahead,” said Gary Cohn, director of the White House National Economic Council. “I would never, ever bet against this president. He will get this done for the American people.”

Unanswered questions

Still, the proposal leaves a series of open questions that could affect its impact on taxpayers and the economy.

The administration wants to reduce the number of tax brackets to three from seven, but it has yet to determine the income levels for people who would be put in each bracket. It also has yet to spell out how the plan would stop wealthier Americans from exploiting a lower corporate tax rate to reduce how much they pay. And the White House has downplayed the threat that the tax cuts could cause the deficit to surge, possibly eroding support for the plan among lawmakers in Trump’s own Republican Party.

National Economic Director Gary Cohn, left, accompanied by Treasury Secretary Steve Mnuchin, speaks in the briefing room of the White House in Washington where they discussed President Donald Trump tax proposals. Washington,
D.C., April 26, 2017 | AP Photo by Andrew Harnik, St. George News

Cohn said Trump and his administration recognize they have to be “good stewards” of the federal budget. But the plan as it currently stands could cause the federal deficit to climb, unless it sparks a massive and lasting wave of growth that most economists say is unlikely.

Administration officials intend to hash out additional details with members of the House and Senate in the coming weeks for what would be the first massive rewrite of the U.S. tax code since 1986.

“We know this is difficult,” Cohn said. “We know what we’re asking for is a big bite.”

As Cohn and Treasury Secretary Steven Mnuchin explained it in an interview, the plan would reduce the number of personal income tax brackets to three from seven: rates of 10 percent, 25 percent and 35 percent. It would double the standard deduction for married couples to $24,000, while keeping deductions for charitable giving and mortgage interest payments. The administration plans to provide tax relief for families with child care expenses, too, although the specifics have yet to be included.

On the other hand, the proposal would trim other deductions utilized by wealthier Americans. These would include deductions for state and local tax payments, a change that could alienate support from lawmakers in states such as California and New York with higher state taxes.

“It’s not the federal government’s job to be subsidizing the states,” Mnuchin said.

Wealthy would get substantial benefits

The administration has emphasized that the plan is focused on simplifying the tax code and helping middle class Americans. The median U.S. household income is slightly above $50,000 annually.

Still, the proposal could reduce the tax burden for the wealthy by substantial amounts, including by eliminating the catch-all alternative minimum tax, which takes an additional bite out of high-income taxpayers.

It would also repeal the estate tax and the 3.8 percent tax on investment income from President Barack Obama’s health care law. The proposal has yet to be vetted for its precise impact on top earners, as several details are still being determined.

On the corporate side, the top marginal tax rate would fall from 35 percent to 15 percent. Small businesses that account for their owners’ personal incomes would see their top tax rate go from 39.6 percent to the proposed corporate tax rate of 15 percent. Mnuchin said the change for small business owners — a group that under the current definition could include doctors, lawyers and even major real estate companies — would be done in a way that would ensure wealthier Americans could not exploit the change to pay less than intentioned in taxes.

Written by STEPHEN OHLEMACHER and JOSH BOAK, Associated Press

Copyright 2017 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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  • Caveat_Emptor April 26, 2017 at 6:50 pm

    A vast majority of voters could agree that the tax code has become so complex, with so many carve outs for special interests, that most people’s eyes glaze over even thinking about it.
    Very few corporations pay the highest rates, because of all the special exemptions they lobbied so hard to get (and paid for in the form of campaign donations).
    Tax simplification is a worthy objective, and if it incentivizes U.S. companies to bring back to this country profits they made overseas, that may have a modestly positive economic impact. Financing of new business investment opportunities has not suffered for lack of available capital here in the U.S.
    Considering that our kids, and their kids, will be facing the enormity of the federal defecit during their lifetimes, tax reform must be at least revenue neutral to the federal government.
    Let’s let the CBO take an objective swing, or two, at these reform proposals, and help us understand who the beneficiaries will likely be. My sense is that none of Trump’s drones can be trusted, including Mulvaney. Not that our prior president could be trusted to tell the whole truth….

    • comments April 26, 2017 at 7:30 pm

      I dunno either, but so far this donald is making the old one look pretty darn good.

  • comments April 26, 2017 at 7:02 pm

    Trump is gonna do what’s good for trump and his zionist bankster buddies, like the 2 in the pic there.

    • Henry April 26, 2017 at 9:50 pm

      Reading Mein Kampf again, Bob?

      • comments April 27, 2017 at 11:45 am

        never read it a 1st time

        • Henry April 27, 2017 at 1:12 pm

          You exhibit the paranoia like you have.

      • comments April 27, 2017 at 11:49 am

        and if these aren’t zionists pls enlighten me as to what they are.

        • Henry April 27, 2017 at 1:14 pm

          A “Zionist” is defined as “a person who believes in the development and protection of a Jewish nation”. Enlighten us with your proof that Cohn or Mnuchin are Zionists.

          • comments April 27, 2017 at 3:41 pm

            OK, I’ll bite…2 wealthy Jewish banksters–what are the odds they aren’t zionists? Zionist economic policies (goldman sachs at the forefront and still calling lots of the shots today) is what caused the housing bubble and big crash in ’08. The donald is all too eager to put this goldman sachs crew back in charge–likely to sink the boat again. The point: we can do better than these types of parasites, and not all of them are even zionists. cheers.

          • Henry April 28, 2017 at 8:10 am

            So applying your logic – “what are the odds” that German bankers aren’t Nazis? That Irish bankers aren’t Irish Republican Army supporters? How can you be such an intelligent guy some times, and so consumed by irrational hate at other times?

          • comments April 28, 2017 at 11:42 am

            Let me tell ya, I’ve known and liked a good many Jewish people in my life, but the number of Jewish zionists in high finance and high places in our gov’t is disturbing (many Israeli/ US dual citizens are in high places in US intelligence and defense dept, and God knows what else), and there’s something about this that’s very sinister. If you want to believe zionists are this innocuous little group that deserves perpetual victim status go for it, but the corrupting influence of zionism has embedded itself deep within our gov’t. It’s right there for all to see and anyone who points it out is labeled a nazi. There will come a time when people will realize, I hope. And I still think Israelis orchestrated the 9/11 attacks 16 years ago. cheers

    • ladybugavenger April 27, 2017 at 6:59 am

      I don’t know about that Bob. But, his goal is to cut taxes and then the companies have more money to put in the workers hands. If greedy corporate leaders would actually pay employees more it would work. But I highly doubt the greedy bastards (am I allowed to say that?) would pass profits on to employees.

      • comments April 27, 2017 at 11:46 am

        You got a lot of faith in this donald. I think all mine has evaporated now.

        • ladybugavenger April 27, 2017 at 12:36 pm

          My faith doesn’t lie in the Donald or in our government, however, if Hillary was elected I’d be running to the hills and going under ground. With Trump, I’m relaxing in my home, and working my little job (I was hired on the day of Trumps inauguration) ….go Trump!

          • comments April 27, 2017 at 3:44 pm

            Well, we’ll see how long the “Hillary would have been worse” excuse works to cover for the donald’s mishaps. cheers

          • ladybugavenger April 27, 2017 at 6:40 pm

            For me, it will work forever Bob.
            You see, things aren’t going to get better, they are going to get worse, with Hillary it would have been worse a lot faster.

            People have gone completely mad. Calling good evil and evil good…it’s only going to get worse.

            Hang in there Bob!

  • Not_So_Much April 27, 2017 at 7:28 am

    I would hope the final plan looks at greatly reducing spending by following the Constitution. Will there still be a zero tax bracket? Of course we could go to a flat or national sales tax and be done with the games.

    • comments April 27, 2017 at 11:48 am

      Admit it, you think a flat tax or national sales tax is a good idea bc you’ve heard it repeated ad infinitum on ‘conservative’ talk radio.

  • Brian April 27, 2017 at 12:39 pm

    Increasing the federal debt over 10 years by reducing taxes now is nothing more than a tax on my kids and future grandkids. That isn’t a tax cut, it’s a shell game. In order to reduce taxes you have to reduce spending. 80% of what the feds spend money on is way outside of their Constitutional mandate anyway, so reducing spending should be quite easy for any honest broker. Therein lies the problem…

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