The Trump administration has announced plans to lower the corporate tax with an aim of boosting economic growth.
Trump Administration Unveils Blueprint to Cut Business Tax Rate To 15%
Steven Mnuchin, the US Treasury Secretary announced President Trump’s plan to bring business tax down to 15% from 35%.
According to economists, the move would add trillions of dollars to the economic deficit over the next decade or so.
However, Mr. Mnuchin insisted that the tax plan would pay for itself through deductions, growth and by ‘closing loopholes.’
On Wednesday, he was accompanied by Gary Cohn, White House chief economic advisor to unveil the tax plan, which he said was the largest corporate tax cut in US history.
Mr. Trump’s proposal is meant to guide Congress in its attempt to push for a tax bill in the coming months.
However, fiscally hawkish Republican lawmakers could possibly challenge these attempts.
According to Democrats, Mr. Trump’s tax liability from his personal business would reduce under his proposed blueprint, allowing him to save millions.
Tom Perez, chairperson of the Democratic Party has reiterated that Mr. Trump needs to release his tax returns for all to see how much he is set to benefit from the reduction in tax rates for businesses.
Broadly, the president’s proposal includes a type of repatriation tax that would offer large companies incentives to put money held overseas back into the US economy. The plan also proposes tax breaks for expenses on childcare, a doubling of standard tax deductions, increases in tax rate cuts for hedge funds and a replacement of existing tax brackets with just three brackets of 10%, 25% and 35%.
The new plan is not expected to include suggestions on how to raise new revenue. It will also not include the proposal to impose a tariff on imports.
Mr. Trump's $1tn infrastructure improvement proposal will also not be included in the blueprint.
It is expected that Democrats will not support the plan on the premise that it contributes to growing the country’s debt.
As such, Republicans, who are in control of the Senate and the House, may be forced to trigger a budget procedure that allows the Republicans to legislate without their Democrat counterparts.
According to reports from the White House, President Trump is eager to see that the tax reform bill is passed by mid-autumn.
Democrats have however been critical of Mr. Mnuchin’s assertion that economic growth would generate adequate tax revenue to compensate for the corporate tax cuts.