President Donald Trump proposed dramatic cuts in corporate and personal taxes today in an overhaul his administration asserts will spur national economic growth and bring jobs and prosperity to America’s middle class.
But as The Associated Press reports, Trump’s ambitious plan is alarming lawmakers who worry it will balloon federal deficits. The plan would reduce investment and estate taxes, helping the wealthy.
But administration officials say several other tax breaks that help well-to-do taxpayers would be eliminated and the plan would largely help the middle class.
The White House has yet to spell out how much of a hole the tax cuts could create in the federal budget, maintaining that the resulting economic growth would eliminate the risk of a soaring government deficit—if not actually cause the red ink to diminish.
The outlined changes to the tax code are the most concrete guidance so far on Trump’s vision for spurring job growth and fulfilling his promise to help workers who have been left behind by an increasingly globalized economy.
The administration wants to reduce the number of tax brackets to three from seven, but it has yet to determine the income levels for people who would be put in each bracket. It also has yet to spell out how the plan would stop wealthier Americans from exploiting a lower corporate tax rate to reduce how much they pay.
On the corporate side, the top marginal tax rate would fall from 35% to 15%.
Small businesses that account for their owners’ personal incomes would see their top tax rate go from 39.6% to the proposed corporate tax rate of 15%.
Treasury Secretary Steven Mnuchin says the change for small business owners—a group that under the current definition could include doctors, lawyers and even major real estate companies—would be done in a way that would ensure wealthier Americans could not exploit the change to pay less than intentioned in taxes.
