Thread: Trump's tax reform plan would dramatically lower rates for businesses, some individua

Trump's tax reform plan would dramatically lower rates for businesses, some individuals

President Donald Trump's tax reform plan would lower the corporate rate to 20 percent, and pass-through business rate to 25 percent.

The plan, set to be unveiled Wednesday, would also reduce the number of individual tax brackets from seven down to three, with a possible fourth bracket if needed.

The plan already faces stiff opposition from Democrats and skepticism from economists.

Published 59 Mins Ago Updated 18 Mins Ago CNBC.com
September 27, 2017

Republicans will unveil sweeping changes to America's tax code Wednesday in a proposal that dramatically lowers taxes on businesses and many households but remains silent on thorny issues such as how to pay for it all.

The framework—a joint product of the Trump administration and Republican leadership—calls for lowering the corporate rate from 35 to 20 percent. It would also bring down the rate for so-called pass-through businesses to 25 percent; currently, they are taxed under the individual code.

The plan, described to CNBC by multiple sources, would collapse the current seven personal tax brackets to just three: 12, 25 and 35 percent. It eliminates the deduction for state and local taxes, but nearly doubles the standard deduction. The child tax credit also would be substantially increased, though it was unclear by exactly how much.

Those broad brushstrokes were hashed out during months of negotiations between Treasury Secretary Steven Mnuchin, National Economic Director Gary Cohn and top Republicans in the House and Senate, a group that has come to be known as the "Big Six." Tax reform has become the clarion call for the party amid rising frustration among conservatives over the failure of the repeal and replace of Obamacare.

"Tax reform is the most important thing we can do to restore confidence to this country, to get jobs and prosperity and that's why we are so singularly focused on getting this done this year," House Speaker Paul Ryan, a Big Six member, said on Tuesday.

But despite the unity around the framework that will be announced Wednesday, Republicans still face plenty of roadblocks on the road to reform. Perhaps the biggest obstacle is sharp criticism from Democrats and skepticism from tax experts, who argue that the proposal primarily benefits large corporations and wealthy households—which could leave Trump's populist base feeling that the president is breaking his campaign pledge to make tax reform benefit the middle class.

The tax reform plan being unveiled Wednesday cuts the top individual income tax rate from 39.6 to 35 percent, although lawmakers received the green light to add a higher fourth rate to respond to pushback, according to a source familiar with the discussions.

Tax analysts also said the lower rate for pass-throughs could wind up being a giant loophole for the wealthy, who could reclassify their income to take advantage of it. Lawmakers who will craft the legislation have been tasked with writing rules to prevent such abuse, a source told CNBC, but drafting language that achieves this has proven insurmountable in the past.

In addition, the framework raises the bottom tax rate from 10 to 12 percent, which primarily affects low-income households. Doubling the standard deduction and expanding the child tax credit could offset that increase for poor households—and possibly result in more people paying no taxes at all.

But experts said that the income brackets that lawmakers set for each tax rate would determine whether that is the case. Under previous analysis of Trump's tax proposals, analysts found that low-income households—particularly single parents—could wind up paying more. That would violate the president's own promise that the benefits of his plan would not be skewed toward the rich.

"They can't achieve that promise and create a structure like this," said Howard Gleckman, a senior fellow at the Tax Policy Center.

Note: This version of the story has been updated to clarify attribution.

https://www.cnbc.com/2017/09/27/trum...dividuals.html

Trump's Indianapolis speech: LIVE UPDATES

Mark Alesia,Chris Sikich,Tony Cook,Kaitlin L Lange and Robert King, IndyStar Published 6:00 a.m. ET Sept. 27, 2017 | Updated 10:44 a.m. ET Sept. 27, 2017

Update 10:30 a.m.

Here's what the polls are saying about Americans' perception of President Donald Trump's tax plan:

According to a Washington Post-ABC News Poll, about half of Americans believe Trump's tax plan will help wealthy Americans even more than the current tax structure.

Nearly three-quarters of adults say America's tax system already favors the wealthy more than the middle class, the poll shows.

A separate CNN poll conducted by SSRS shows that just 12 percent of Americans say tax reform should be Congress's highest priority over the next few weeks, compared to 31 percent for healthcare and 36 percent for disaster relief.

Over two-thirds of Americans surveyed say federal tax laws need revamped, including 77 percent of Republicans and 62 percent of Democrats.

Update 9:34 a.m.

President Donald Trump and congressional Republicans are proposing a tax plan that they say will be simple and fair.

In a document obtained by The Associated Press on Wednesday, their outline a blueprint for almost doubling the standard deduction for married taxpayers filing jointly to $24,000, and $12,000 for individuals.

The plan calls for cutting the corporate tax rate from 35 percent to 20 percent. The GOP proposal also calls for reducing the number of tax brackets from seven to three with a surcharge on the wealthiest Americans.

The plan also leaves intact the deduction for mortgage interest and charitable deductions. -- Associated Press

The White House and Republicans plan a formal roll out later Wednesday.

Update 9:15 a.m.

President Donald Trump will try to turn the page in Indianapolis today after a pair of political losses the day before.

Trump is expected to roll out details of a tax reform plan during a 3 p.m. event at the Indiana State Fairgrounds.

The speech comes after the latest plan to repeal and replace Obamacare collapsed on Tuesday, with Senate Majority Leader Mitch McConnell conceding that Republicans didn't have enough votes to support it.

Also on Tuesday, conservative firebrand Roy Moore defeated Trump's preferred candidate, Sen. Luther Strange, in Alabama's GOP U.S. Senate primary.

In Indianapolis, Trump will try to refocus attention on a Republican plan to overhaul the federal tax code. He's expected to discuss new details about the proposal during his speech.

With health care off the table for now, the tax reform effort represents perhaps the best opportunity for the administration to score a major legislative victory before the end of the year.

Previously

President Donald Trump will visit Indianapolis Wednesday to unveil some details of his tax reform plan.

IndyStar will be covering all the action throughout the day, so check back here for frequent updates.

Trump is scheduled to arrive to Indianapolis International Airport on Air Force One at 2:30 p.m. He will then speak in the Farm Bureau Building at the Indiana State Fairgrounds around 3 p.m.

The event is by invitation only, but you can watch a live stream of the speech on IndyStar. You can also follow a cadre of IndyStar reporters on Twitter as they cover all aspects of the event.

Trump has released few specifics so far, but plans to unveil a "comprehensive report" on Wednesday. That plan will include condensing the seven tax brackets to just three and reducing the corporate tax rate to 20%, according to a lobbyist who saw the plan.

President Donald Trump and Vice President Mike Pence

President Donald Trump and Vice President Mike Pence wave to supporters at Phoenix Sky Harbor International Airport on Aug. 22, 2017. (Photo: Patrick Breen, The Arizona Republic-USA TODAY NETWORK)

A senior White House official said Trump will point to Vice President Mike Pence's history of cutting taxes as Indiana governor as an example of the benefits of tax reform.

http://www.indystar.com/story/news/p...tes/702836001/

Trump, GOP plan to cut tax rate, double deductions

By Katherine Faulders
Alexander Mallin

Sep 27, 2017, 11:01 AM ET

President Trump will unveil his administration's tax reform plan today in a speech in Indianapolis, Indiana. He's expected to announce tax cuts on businesses and individuals.

The plan would slash the corporate tax rate to 20 percent from 35 percent, lower the top individual tax rate to 35 percent from 39.6 percent, repeal the estate tax, double the size of standard deductions for married couples and individuals and expand child tax credits.

Trump has repeatedly stated that he wants a 15 percent corporate tax rate. House Speaker Paul Ryan has argued for a 22.5 percent rate.

The plan is expected to include a tax cut for the country's highest earners, despite Trump's pledge that it would not benefit the wealthiest Americans. The administration, however, has said that the House and Senate committees crafting the legislation could choose to add another tax bracket above the 35 percent rate if necessary.

The president is expected to say that his plan will restore a competitive advantage for U.S. businesses and create more jobs and higher wages for American workers. Administration officials say the new framework will make the tax code simple, fair and easier to understand.

Any changes “should benefit loyal, hardworking Americans and their families,” according to Trump.

The president, who previewed his plan Tuesday with bipartisan members of the House Ways and Means Committee, said his plan is based on four principles: making the tax code simple and fair, cutting taxes “tremendously” for the middle class, lowering the tax rate for businesses and “bringing back trillions of dollars in wealth parked overseas.”

The White House is now looking for a legislative win after Republican leaders said Tuesday they would no longer hold a vote on their Obamacare replacement plan. Three members of the Senate said they wouldn’t approve the measure, effectively killing the bill.

Sen. Lindsey Graham, R-S.C., one of the sponsors of the legislation, vowed to return to health care after tax reform.

http://abcnews.go.com/Politics/presi...ry?id=50126267

Chuck Schumer: Trump, GOP tax plan to be cheered in 'country clubs and the corporate board rooms'

by Al Weaver | Sep 27, 2017, 12:00 PM

Senate Minority Leader Chuck Schumer, D-N.Y., took aim at the Republican tax plan set to be released Wednesday afternoon, saying it will be cheered in "country clubs and the corporate boardrooms" throughout the U.S. and doesn't do enough for middle-class Americans.

Schumer pointed to reports of the Republican plan to repeal the estate tax, lower the top tax rates and raise the bottom tax rate, adding it would result in a "massive windfall" for wealthy Americans.

"Each of these proposals would result in a massive windfall for the wealthiest Americans, and provide almost no relief to middle-class taxpayers who need it most," Schumer said on the Senate floor. "It seems like President Trump and Republicans have designed their plan to be cheered in the country clubs and the corporate boardrooms."

"This is not going to fly with the American people, let me tell you," Schumer added.

The comments come ahead of the GOP's rollout on the issue, including President Trump's planned speech in Indianapolis on the topic.

Republicans have almost exclusively turned their attention to reforming the tax code in the wake of the failed third effort in the Senate to repeal and replace the Affordable Care Act. Senate Majority Leader Mitch McConnell, R-Ky., called off a vote on the Graham-Cassidy bill Tuesday after it became apparent that they did not have the votes.

http://www.washingtonexaminer.com/ch...rticle/2635796