CHN: Trump Administration Releases Tax Cut Outline
On April 26, the Trump Administration released an outline of a tax agenda that would slash taxes on corporations and wealthy individuals. The plan would cut the corporate tax rate by nearly 60 percent – down from 35 percent to 15 percent – for corporations, and other businesses that pay tax through the individual income tax would do even better. The latter includes very lucrative businesses like those set up by hedge fund managers, lawyers, and real estate tycoons; Trump himself actually owns 500 such so-called “pass-through” businesses. The plan would also impose a “very competitive” one-time tax on trillions of dollars of profits held by corporations offshore, which Americans for Tax Fairness (ATF) says could add up to giving these companies a huge tax break of as much as $600 billion. The plan also includes slashing taxes on wealthy individuals by eliminating the alternative minimum tax, the estate tax, and a tax on wealthy investors that helps pay for lower-income families’ health care under the Affordable Care Act. For a summary of what’s in the Trump tax cut outline, see this piece from ATF. As the Center on Budget and Policy Priorities notes, the Trump plan “calls for ‘tax relief for families with child and dependent care expenses’ but doesn’t explain how it would do so.”
While the Trump administration said the tax cuts will pay for themselves with economic growth and reduced deductions, most experts (even conservatives like those at the Tax Foundation) disagree. The nonpartisan Committee for a Responsible Federal Budget estimated that the plan will result in $5.5 trillion in revenue lost over of decade, and that cost could go as high as $7 trillion. Advocates are concerned that the GOP will insist on cuts to critical human needs programs to pay for these tax cuts rather than allow the deficit to balloon.
Treasury Secretary Mnuchin said he would like to see tax reform legislation completed this year. House Speaker Paul Ryan has indicated that Republican leaders in Congress are working with the White House to reach consensus on a plan. Republicans in Congress hope to use a special process known as reconciliation with the FY18 budget resolution that would allow them to pass tax reform with only a simple majority in the Senate.