Republican tax proposals to call for sharp cut in corporation tax

Posted September 28, 2017

Today's announcement is the result of years of work by our committee to overhaul the US tax code and provide meaningful tax relief for middle-class Americans while boosting our economy.

The current seven tax brackets would be reduced to three: 12 percent, 25 percent and 35 percent.

Top republican leaders say they're making tax reform their focus now after striking out on health care, but not everyone is on board with the plan.

But the most important detail - when each bracket kicks in - has yet to be spelled out.

The plan has more winners than losers, largely because Trump is leaving it to Congress to figure out how to pay for it - or whether to pay for it. He says: "Democrats don't want massive tax cuts - how does that win elections?" Families get up to a $1,000 credit per child under current law.

A 20% corporate tax rate - a slight change from his campaign promise of 15%.

In addition, Trump's plan would eliminate an individual tax on inheritance or gifts above $5.49 million, known as the estate tax. The effects of a burdensome federal tax system that discourages growth trickle down to the American worker through less take-home pay and less opportunity. For instance, some people in the US who make between $200,000 and $1 million don't have incomes from taxable 9-5 jobs.

Republican members of Congress echoed Trump's declaration that the plan would boost the economy, and wages with it. There will be a one-time tax on companies who don't bring their profits back to the U.S. The amount of that tax is unknown.

But Senate Republicans have shown signs of moving away from using such "dynamic" scoring to assess tax legislation impact, which could mean the plan could balloon the federal budget deficit, alarming fiscal hawks. Currently, that family starts out with at least $28,800 of income exempt from taxes, thanks to the standard deduction plus four exemptions.

This provision would allow middle-class families to shield more of their income from taxation. A unspecified fourth bracket could be added for the country's wealthiest people.

American taxpayers eagerly awaiting details of President Donald Trump's ambitious tax reform plan Wednesday were left with more questions than answers.

Senior administration officials told reporters on Tuesday that the goal of the new plan is to "be at least as progressive" as what's now in place.

The administration says it would eliminate most personal tax breaks.

-Taxpayers who itemize their deductions.

Trump noted that the first US$12,000 earned by an individual and the first US$24,000 by a married couple would be tax-free.

Senate minority leader Chuck Schumer told reporters that while Trump has "talked the talk" on tax reform by aiming the benefits at the middle class, "he ain't walking the walk".

The tax plan will likely be revealed in the next coming weeks, but Congressional tension is already brewing across the political divide.