Wednesday the Trump administration unveiled its plan to slash taxes for businesses and to make significant changes to individual tax rates with the goal of spurring sustained economic growth of 3 percent.
The most dramatic cut would be the rate for businesses which would drop from 35% down to 15 percent. Business income reported on individual tax returns would also be taxed at 15 percent. But there would also be significant changes to the individual tax rates. From the NY Times:
The Trump administration would double the standard deduction, essentially eliminating taxes on the first $24,000 of a couple’s earnings. It also called for the elimination of most itemized tax deductions but would leave in place the popular deductions for mortgage interest and charitable contributions. The estate tax and the alternative minimum tax, which Mr. Trump has railed against for years, would be repealed under his plan.
The Wall Street Journal notes another change that will impact individuals living in states with high tax rates:
Mr. Trump is proposing to repeal a provision of the tax code that allows individuals to deduct the state and local taxes they pay from their reportable income. That will hurt residents of high-tax states such as New York, New Jersey and California and spur objections from some Republican lawmakers in those states.
The plan was unveiled at the White House by Treasury Secretary Steve Mnuchin and National Economic Director Gary Cohn. Cohn spoke first at the rollout calling the plan “one of the biggest tax cuts in American history.”
“We are going to cut taxes and simplify the tax code by taking the current 7 tax brackets we have today and reducing them to only 3 brackets,” Cohn said. He closed his remarks predicting pushback from all sides. “This isn’t going to be easy. Doing big things never is. We’ll be attacked from the left and we’ll be attacked from the right,” Cohn said.
Secretary Mnuchin took the podium to talk about the business tax side of the plan. “The president’s objective is creating economic growth and as we’ve said before we believe we can get back to 3% or higher GDP that is sustainable in this country,” Mnuchin said.
The media response to the announcement was about what you’d expect. At first there were questions seeking more details, i.e. exactly who will pay the new individual rates, etc. However, by the end of this clip the Treasury Secretary is being asked for Trump’s tax returns and reporters are questioning whether this change will benefit Trump’s businesses.
So if you’re wondering what the spin on this is going to be over on MSNBC, that’s probably going to be it. Plans for a massive business tax cut and simplification of the system for everyone is suspect because the changes would also benefit the President.