Trump tax plan: Relief for his voters but lots of unknowns

02 May, 2017, 22:52 | Author: Alicia Barber
  • Gary Cohn Steve Mnuchin

Bigger tax breaks for parents. But whether they pay more or less depends largely on details that have yet to be released. Though there would surely be changes made to any administration plan once it reaches Congress, having the president present a coherent vision of a policy gives lawmakers a useful starting point.

Thursday morning, Treasury Secretary Mnuchin appeared on ABC News' "Good Morning America", and admitted he can't promise middle class families will actually get a tax cut. And some 14 percent of the profit was taxed at less than 15 percent, the rate the Trump administration has proposed as the new statutory maximum. But what about everyone else?

The plan would also reduce the number of tax brackets for individuals, dividing Americans into groups that are assessed either 10, 25 or 35 percent. Yet the elimination of most deductions could nudge some wealthier Americans into higher brackets, he says. But who will pay which rate? The Congressional Research Service reviewed tax cuts since 1945 and found no evidence they generate economic growth.

We told you what to expect from Trump's Tax Plan, which was released this Wednesday. During the campaign, Trump said that families with stay-at-home moms would benefit equally from this tax relief.

Republicans have questions about how the federal government will make money with such cuts and how the enacted proposal won't cause the deficit, a term for the national debt, to skyrocket.

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Elsewhere in the interview, Mnuchin acknowledged that the plan would cut taxes for wealthy people, but he said they would make up for this by eliminating unspecified deductions that the wealthy often use to avoid paying taxes.

For that reason, the CRFB looked at the tax cuts relative to the size of the overall US economy, i.e., tax cuts as a share of gross domestic product.

Given that the plan is similar to what Trump proposed on the campaign trail, the Committee for a Responsible Federal Budget did a rough cost estimate of his latest ideas and concluded they could cost $5.5 trillion in lost revenue during the first decade. Mnuchin said the plan "will pay for itself with growth" and with the reduction of deductions and loopholes.

Reagan's steep cut in 1981 contributed to years of deficits, even after he was forced to raise some taxes in subsequent years to stem the red ink.

"Regardless of the plan's fate", the editorial board writes, Trump "has already sent a strong message about where his sympathies really lie". At the moment, Democrats are very reluctant to help the president achieve any legislative victories and are unlikely to side with Republicans to cut taxes for corporations.

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