Aug 30 2017, 3:24 PM
NOTHING CAN BE CERTAIN
Wednesday, President Trump kicked off his tax reform tour with a speech at a Springfield, Missouri manufacturing plant. Trump left many of the details of the plan to the imagination, however, instead speaking in broad strokes about how the plan will bring back Main Street through big tax cuts for companies and individuals. With Trump keeping his hand close, what if anything do we know about the tax plan that he intends to push through Congress for his first big legislative win?
In April, Trump Proposed Slashing Income Tax...
In April, shortly after Trump took office, the administration proposed slashing income tax for individuals — capping personal income tax at 35% (a reduction from 39.6%), doubling the standard deduction (effectively lowering everyone's taxes), using a system of only 3 tax brackets (10%, 25%, and 35%) rather than the current seven, and eliminating the alternative minimum tax and net investment income taxon capital gains.
...And Corporate Taxes
Trump's April plan would cap corporate and business taxes at 15% (reportedly increased to 20% in a later private version, but doubled down on in today's speech) — what is currently the lowest corporate rate (the highest is 35%).
The Plan Would Also Eliminate The Estate Tax
The plan would also eliminate the estate tax, which taxes the transfer of assets from one family member to the other after death. Its elimination would exclusively benefit the wealthy: In 2017, an estate must exceed $5.49 million to be taxed.
It Would Benefit The Wealthy The Most, And Reduce Federal Revenue
An analysis conducted by the Tax Policy Center of the Urban Institute and the Brookings Institution found that the plan would provide the biggest tax cut (12% more than the average household) for the wealthy.
The analysis estimates that the plan would result in a GDP loss of 2.6% and an increase in the national debt of $7.2 trillion.
Such massive cuts to taxes and revenue would have a clear impact on Trump's infrastructure plan, which includes his proposal for a border wall. In an interview with Bloomberg in May, Trump proposed raising the gas tax to help fund the plans.
Now, It's Reported Tax Cuts Will Be Lower
On Tuesday, The New York Times reported that political reality may get in the way of Trump's original ambitions. Two sources told the Times that National Economic Council director Gary D. Cohn and Treasury Secretary Steven Mnuchin, who are in charge of drafting and passing Trump's tax plan, have moderated the originally proposed tax cuts:
A 15 percent corporate tax rate proposed in April is now likely to move to the 20 to 25 percent range, say two people familiar with the officials’ recent thinking. And a proposed 35 percent ceiling on the highest personal income tax rate could be shelved altogether, leaving the current 39.6 percent cap intact.
Congressional Leaders And The White House Are Reportedly Still Battling Over The Details
Despite Trump's speech and initial proposals, CNN reports that the details of the final plan will not emerge for weeks — going through congressional committee edits before reaching the public.
Through the summer, The White House has been working closely with Congressional Republicans on the tax plan, learning their lessons from the failed attempt at an Obamacare repeal cause by internal party fractions.
Benjamin Goggin is the News Editor at Digg.