President Donald Trump’s administration unveiled their new tax reform plan Wednesday that officials said would revitalize the American economy by simplifying the tax code and implementing one of the biggest tax cuts in American history.
National Economic Director Gary Cohn said that this was a “once in a generation opportunity” to get changes done in tax reform with a Republican President and Congress.
“The president is going to seize this opportunity by leading the most significant tax reform legislation since 1986,” Gary Cohn said in a press conference. “Tax reform is long overdue.”
Cohn said this lack of reform had been driving down the competitiveness of American businesses.
“In 2017, we are still stuck with a 1988 corporate tax,” Cohn said. “That is why we are now one of the least competitive countries in the developed world when it comes to corporate tax.”
The president’s new plan cuts the corporate tax rate from 35 percent to 15 percent for business ranging from corporations to small businesses. Treasury Secretary Steve Mnuchin said this was to promote economic growth.
“Our objective is to make U.S. businesses the most competitive in the world,” Mnuchin said in a press conference. “Under the Trump plan, we will have a massive tax cut for businesses and massive tax reform and simplification.”
Mnuchin also said during the press conference that the tax plan would “pay for itself with growth and with reduction of different deductions and closing loopholes.”
One of the key campaign promises the president made was to simplify the tax code through massive reform by reducing the number of tax brackets under which someone could file.
The president’s new plan reduces the current seven income tax brackets to three. A 35 percent bracket, a 25 percent bracket, and a 10 percent bracket. The current top tax rate is 39.6 percent.
Mnuchin also said there was a proposal for a one-time tax on corporate money overseas in hopes to bring back trillions of dollars to the U.S.
Through the plan the administration hopes to double the standard deduction for taxpayers, thus increasing the amount of income families and individual filers can report to the IRS tax-free.
Currently, the deduction for individual filers is $6,300. Under the new plan however, the standard deduction for individual filers would be raised up to $12,000. For joint-filing married couples, the deduction would rise from $12,600 to around $24,000.
The plan would eliminate the estate tax, or the “death tax” and the 3.8 percent tax on investment income under ObamaCare.
The plan is being faced with skepticism and questions on Capitol Hill. Over the next few weeks, both sides of the aisle will be regarding the proposed tax plan’s impact on the president’s already proposed federal budget and the current deficit. The tax cuts the president put forward are said to represent billions of dollars in lost revenue every year.
Mnuchin, however, said that the lowering of the current tax rates would be compensated by overall growth.
“We believe we can get back to 3 percent or higher GDP that is sustainable in this country,” Mnuchin said during a press conference. “The overall economic plan consists of massive tax cuts and tax reform, regulatory relief, and renegotiating trade deals. And with that, we will unlock the economic growth that’s been held back for too long in this country.”
The plan faced starch criticism from the left immediately after its release.
Ranking Member of the Senate Finance Committee Ron Wyden (D-OR), issued a statement on the plan calling it an “unprincipled tax plan that will result in cuts for the one percent, conflicts for the President, crippling debt for America and crumbs for the working people.”
GOP agenda today
☑️Tax cut for big corporations
☑️New Trumpcare plan empowering big insurers
☑️Net neutrality rollback favoring big cable
— Ron Wyden (@RonWyden) April 26, 2017
Some Republican lawmakers, however, see the tax plan as a great basis for the planned republican overhaul of the American tax system.
In a joint statement Wednesday, Senate Majority Leader Mitch McConnell (R-KY), House Speaker Paul Ryan (R-WI), House Ways and Means Committee Chairman Kevin Brady (R-TX), and Senate Finance Committee Chairman Orrin Hatch (R-UT) said the principles of the tax cuts: “will serve as critical guideposts for Congress and the administration as we work together to overhaul the American tax system.”
— GOP Senate Finance (@GOPSenFinance) April 26, 2017
The statement continued, talking about how this overhaul would help Americans.
“Lower rates for individuals and families will allow them to keep more of their hard-earned money and empower them to invest more in their future,” they said. “Getting tax rates down for American companies, big and small, will create new jobs and make the United States a more inviting place to do business.”