He told the Associated Press he’d be unveiling a tax plan with a “massive” tax cut – “bigger I believe than any tax cut ever” – for businesses and individuals alike.
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“We need to make business taxes competitive”, Mnuchin said.
“The process has begun long ago, but it will formally begin on Wednesday”, he said.
The president has instructed advisers to propose cutting the corporate tax rate from 35 per cent to 15 per cent, according to White House officials who said they were not authorized to speak publicly about the plan. It will be a few broad principles and maybe some guidelines.
The top tax rate for individuals would be cut from 39.6 percent to the “mid-30s”, the official said.
Last month when an attempt supported by Trump to repeal the healthcare law known as Obamacare collapsed in congress, Trump said he would refocus on taxes. “If our markets are open, there should be a reciprocal nature to other people’s markets”, he said. The administration has started working with House and Senate committees “as we try and build some momentum for this tax plan”.
“The average American should be able to do his taxes on a large post card”, he told reporters.
The White House would not say if it is on board with the “border adjustment” tax, a 20 percent tax on imports central to Ryan’s plan.
But White House spokesman Sean Spicer says the administration is confident a shutdown will be avoided.
He also said they have not decided whether to offset the rate cuts with other changes that would reduce the budget deficit.
Senior administration officials including Treasury Secretary Steven Mnuchin and Gary Cohn signaled at an Institute of International Finance conference Thursday that the administration is more concerned with economic growth and job creation, than revenue neutrality. “Tax reform is way too complicated”, he said.
Here’s why: Republican leaders are eager to cut corporate taxes, but for various reasons they don’t want to add to the country’s debt. They have no idea what they are doing.
The problem is that the economy can’t grow quickly enough to cover the likely hole in the deficit. That means Democrats would have to support it, and Republicans and Democrats have major differences when it comes to tax reform.
Factoring in the macroeconomic impact of tax cuts is controversial because it’s very hard to do. But they will disagree about how much growth will result, and therefore how much of the plan’s revenue loss will be offset. While some Capitol Hill budget hawks reflexively oppose deficit spending, Trump has always been perceived as being more open to debt financed government spending.
The Tax Policy Center, a nonpartisan tax group affiliated with the Brookings Institution and Urban Institute, has estimated that Trump’s corporate tax proposal, as outlined during the campaign, would cost US$2.4 trillion over 10 years. He also proposed limiting the deductions that the wealthiest Americans could claim, something that was also rejected.
President Trump continues to tease that a big announcement on tax reform is imminent. And that growth, in turn, will generate more revenue. In contrast, Mnuchin’s comments suggest the administration is looking for a 50 cents-plus payback. You have encouraged us in our mission – to provide quality news and watchdog journalism.
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