ibusinesslines.com
ibusinesslines.com June 24, 2018


U.S. needs tax reform, not tax cuts for the wealthy

17 September 2017, 07:07 | Erica Roy

Chip Somodevilla Getty Images House Ways and Means Committee Chairman Kevin Brady

Republicans prepared to release details of tax plan in upcoming weeks

President Donald Trump said Wednesday he wants changes to the US tax code that benefit the middle class, not the wealthy - a call that contradicts some of his fellow Republicans' positions and may complicate the path forward on tax legislation. Republicans have to agree on a 2018 budget resolution - a necessary step to unlock the procedural maneuver they intend to use to pass the tax plan with 50 votes in the Senate.

Donald Trump has reiterated his goal to lower the United States corporate tax rate to 15 per cent to "match" China.

On taxes, Trump himself added to the complications when he surprisingly declared, at a meeting with a bipartisan group of House members, that taxes on the wealthy would not go down under the GOP plan and might even go up.

He didn't say that Thursday, and he emphasized that wealthy Americans are not his priority. And some conservatives were voicing concerns about Trump's newfound fondness for making deals with Democrats, as he did last week on the debt ceiling with House Minority Leader Chuck Schumer of NY and House Minority Leader Nancy Pelosi of California.

Mr Trump has said the rich might see a hike in taxes as he pursues his tax overhaul by reaching out to Democrats to oppose cutting tax rates for the wealthy.


In the USA, businesses are subject to the 35% rate but can claim a slew of deductions that drive their tax bills lower. Both Pelosi and a top White House staffer also indicated Tuesday that they were open to a compromise on border security to expedite legislation protecting DACA recipients. "We are looking for the middle class and we are looking for jobs - jobs being the economy". Trump has said that his goal is a 15 percent corporate rate - a goal he repeated Wednesday.

Ryan said the outline to be released would reflect agreement among the tax-writing Ways and Means and Finance committees, and the administration. "Now Trump is talking about doing bipartisan stuff with Chuck and Nancy on taxes".

Similarly, Trump's rhetoric is at odds with the math regarding his proposed reduction of seven individual tax brackets to three tax brackets of 10, 25 and 35 percent. But none have presented details of a plan. Yet the Urban Institute-Brookings Institution Tax Policy Center estimates 40 percent of the benefits would go to the top 1 percent of households, which make more than $732,000 a year.

"This is really the consensus of the tax writers themselves so that we're working from the same page", Ryan said during a press conference Wednesday.

An analysis by the Washington-based Tax Policy Center found that under the one-page tax outline that the White House released in April, nearly 40 percent of the tax cuts would have gone to the top 1 percent of earners - giving those households an average annual tax cut of $270,000.



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