Trump tax plan cuts rates, eliminates deductions

Steve Mnuchin (mih-NOO'-shin) made the comment while briefing reporters on the president's new proposed tax plan Wednesday.

At the same time, the plan would eliminate the federal income-tax deduction allowed for state and local taxes - a provision that would hit high earners in high-tax states, including NY and New Jersey. These taxes can be particularly high in states with higher income taxes, such as California and NY.

Trump wants to slash the corporate tax rate from 35 to 15 percent and also allow private and "pass-though businesses" like his own real estate empire to file like corporations.

For instance, if the new bracket for the 10% rate only extends to married couples making up to $75,000 annually, Americans making $75,001 could see that additional income be taxed at the 25% marginal rate instead of the 15% rate. It also imposes a one-time tax on about $US2.6 trillion in earnings that USA companies have parked overseas. It would also end a 3.8 per cent net investment income tax that applies only to individuals who earn more than $US200,000 a year, repeal the alternative minimum tax and eliminate the estate tax, which now applies only to estates worth more than $US5.49 million for individuals and $US10.98 million for couples.

Others, like PVH CEO Manny Chirico, argued the so-called border adjustment tax would force retailers to eliminate jobs as they looked for ways to cut costs.

A key part of Trump's tax plan during the campaign was to levy a tax or tariff against companies that move overseas and then try to sell their products back to American consumers.

"We just don't think it works in the current form", he said, without giving details about how they would fix it.

Mr. Trump's tax agenda is headed for a challenging road through Congress, where budgetary hurdles and complex politics could make it hard for him to get a quick victory. The Republican Party is divided on how and whether the plan should be paid for.

The tax cuts could be limited to a 10-year period, but Mnuchin said that would be less than ideal.

The administration has said its tax cuts will spur growth - its goal is 3 per cent - thus bringing in tax revenues to make up the difference, a calculation known as "dynamic scoring" which the Trump administration supports. But lawmakers and Congress's nonpartisan tax policy scorekeepers - the Joint Committee on Taxation - need to agree with that assessment to proceed.

"We have a once in a generation opportunity to do something big and important on taxes", White House National Economic Council Director Gary Cohn said Wednesday.

Even with Mnuchin's seemingly definitive answer, the issue of Trump's tax returns isn't likely to go away.

Lowering the corporate rate to 15 percent, critics argue, may make it hard for the Trump plan to pay for itself with increased revenue elsewhere. "This is going to be for small businesses that drive the economy and they will have benefit of this". Orrin Hatch, R-Utah, the chairman of the Senate Finance Committee, told The Associated Press. "There's no question about it". It has not been revealed which income amounts would fall into these new brackets. The median US household income is slightly above $50,000 annually.

But they can also include large law firms and lobbying shops. They didn't specify what that tax rate would be, saying its now part of negotiations on Capitol Hill, but they believed providing this incentive would bring money back for investment and hiring. It didn't take a position on revenue-raisers that House Republican leaders have proposed, including a border-adjusted tax on imports and domestic sales. "God bless them. Let them do well".

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Mnuchin confirms Trump to propose 15% corporate tax rate