President Donald Trump is proposing “the biggest tax cut” ever even as the government struggles with mounting debt, in an effort to fulfil promises of bringing jobs and prosperity to the middle class.
White House officials were to release broad outlines of a tax overhaul that would provide massive tax cuts to businesses big and small. The top tax rate for individuals would drop by a few percentage points, from 39.6 per cent to the “mid-30s,” according to an official with knowledge of the plan.
Small business owners would see their top tax rate go from 39.6 per cent to 15 per cent, said the official, who was not authorised to publicly discuss the proposal before the White House announcement and spoke on condition of anonymity.
Treasury Secretary Steve Mnuchin, in his morning speech, said the proposed overhaul would amount to “the biggest tax cut” and the “largest tax reform” in US history.
White House officials already have said the top corporate tax rate would be reduced from 35 per cent to 15 per cent. The plan will also include child-care benefits, a cause promoted by Trump’s daughter Ivanka.
Trump sent his team to Capitol Hill Tuesday evening to discuss his plan with Republican leaders.
“They went into some suggestions that are mere suggestions and we’ll go from there,” said GOP Senator Orrin Hatch of Utah, chairman of the Senate Finance Committee.
The White House’s presentation will be “pretty broad in the principles,” said Marc Short, Trump’s director of legislative affairs.
In the coming weeks, Trump will solicit more ideas on how to improve it, Short said. The specifics should start to come this summer.
Short said the administration did not want to set a firm timeline, after demanding a quick House vote on a health care bill and watching it fail.
But, Short added, “I don’t see this sliding into 2018.”
Republicans who slammed the growing national debt under President Barack Obama have said they are open to Trump’s tax plan, even though it could add trillions of dollars to the deficit over the next decade.
Echoing the White House, Republicans argue the cuts would spur economic growth, reducing or even eliminating any drop in tax revenue.
“I’m not convinced that cutting taxes is necessarily going to blow a hole in the deficit,” Hatch said.
“I actually believe it could stimulate the economy and get the economy moving,” Hatch added. “Now, whether 15 per cent is the right figure or not, that’s a matter to be determined.”
The argument that tax cuts pay for themselves has been debunked by economists from across the political spectrum.