•Corporate tax to be slashed from 35 per cent to 15 per cent
•Top rate cut for individuals from 39.6 per cent to “mid-30s”
•Individual tax brackets reduced from seven to three
•US stocks hover near record amid optimism
•Family on $60,000 will pay less tax
•Cuts would wipe out more than $600 billion a year in revenue
•Cuts to be paid for by 3 per cent growth boom
President Donald Trump offered relief for the American middle class as part of what the White House called “biggest tax cut in history” as he approached 100 days in office.
Trump’s sweeping and ambitious tax reform plan met a campaign promise to reduce taxes and was expected to be widely welcomed by middle income earners who backed him in the election.
Asked what the announcement would mean for a family on $60,000 a year Gary Cohn, Director of Trump’s National Economic Council, said: “It means a tax cut.”
He added: “We will continue to give you more details as we have them. We have a once in a generation opportunity to do something really big.”
The plan included a doubling to $24,000 of the amount a married couple could earn before being taxed.
Cohn said: “In essence we are creating a zero tax rate, yes, a zero tax rate, for the first $24,000 a couple earns.
“Families will benefit from tax relief that will help them with child and dependent care expenses.”
Middle class taxpayers would also benefit from a simplification of the tax code, he said.
Seven individual tax brackets will be reduced to three – 10 per cent, 25 per cent and 35 per cent.
Cohn said far fewer tax payers would need to itemise deductions so they could go back to filing one their returns on one simple page rather than the current system which was too complicated for many to understand.
Amid the warnings that the cuts would lead to ballooning deficits Cohen and Steve Mnuchin, the Treasury Secretary, said they would be paid for by economic growth, with an annual rate of three per cent being “very achievable”. Reducing tax deductions and closing loopholes would also help pay for it.
Cohn said: “Job creation and economic growth is the top priority of the administration. This is about growing the economy and growing jobs. President Trump talks to the two of us every day to see what we’re doing to stimulate economic growth.”
Mnuchin said: “Will it pay for itself? We’re working on details, we have over 100 people at the Treasury working on scenarios. “The debt went from $10 to $20 trillion in the last administration. The Trump plan will grow the economy and create massive amounts of revenues, trillions of dollars. We are at a historic moment.”
The plan also included slashing corporation tax from 35 per cent to 15 per cent, and abolishing the death tax.
Mnuchin said: “Our objective is to make US businesses the most competitive in the world.”
Republicans in Congress welcomed the plan, but as a starting point with room for negotiation.
Senator Orrin Hatch of Utah, chairman of the Senate Finance Committee, said: “I actually believe it could stimulate the economy. Now, whether 15 per cent is the right figure or not for corporate tax that’s a matter to be determined.”
Democrats attacked the plan as one that would benefit the rich. Chuck Schumer, the Senate Democratic leader, said: “If the president’s plan is to give a massive tax break to the very wealthy in this country, a plan that will mostly benefit people and businesses like President Trump’s, that won’t pass muster with Democrats.”
The Committee for a Responsible Federal Budget, a group focused on reducing deficits, said Trump’s tax plan was more likely to increase growth by 0.2 percentage points, rather than higher estimates made by the White House. It said: “These tax cuts, of course, would not pay for themselves.”
Democrats also called for Trump to release his own tax returns to see if he would benefit.
But Mnuchin said: “The president has no intention. The president has released plenty of information and I think has given more financial disclosure than anybody else. I think the American population has plenty of information.”
The plan was welcomed by corporate leaders. But AT&T chief executive Randall Stephenson said: “The practical reality of getting to 15 percent is you have to get yourself reconciled to some level of deficits for a period of time as you get the economic stimulation.”
Tax experts said the plan would benefit hedge funds. Robert Willens, an independent tax consultant, said: “For hedge funds this is an unmitigated benefit as their tax liabilities could drop significantly. Obviously, they are quite enthusiastic and there may be a few fist bumps along the way.”
Others warned it could cause interest rate hikes by the Federal Reserve.
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