US President Donald Trump on Wednesday proposed the biggest US tax overhaul in three decades, calling for tax cuts for most Americans, but prompting criticism that the plan favors business and the rich and could add trillions of dollars to the deficit.
The proposal drew a swift, skeptical response from US Senator Bob Corker, a leading Republican “fiscal hawk,” who vowed not to vote for any federal tax package financed with borrowed money.
“What I can tell you is that I’m not about to vote for any bill that increases our deficit, period,” Corker, who said on Tuesday he would not seek re-election next year, told reporters.
Trump said his tax plan was aimed at helping working people, creating jobs and making the tax code simpler and fairer.
However, it faces an uphill battle in the US Congress with Trump’s own Republican Party divided over it and Democrats hostile.
The plan would lower corporate and small-business income tax rates, reduce the top income tax rate for high-earning American individuals and scrap some popular tax breaks, including one that benefits people in high-tax states dominated by Democrats.
Forged during months of talks among Trump’s aides and top Republican lawmakers, the plan contained few details on how to pay for the tax cuts without expanding the budget deficit and adding to the nation’s US$20 trillion national debt.
The plan still must be turned into legislation, which was not expected until after Congress makes progress on the fiscal 2018 budget, perhaps next month. It must then be debated by the Republican-led congressional tax-writing committees.
Analysts were skeptical that Congress could approve a bill this year, but that is what Republicans hope to achieve so they can enter next year’s mid-term election campaigns with at least one legislative achievement to show for this year.
At an event in Indianapolis, Indiana, Trump called the plan the largest tax cut in US history.
“We want tax reform that is pro-growth, pro-jobs, pro-worker, pro-family and, yes, tax reform that is pro-American,” he said.
The real-estate mogul-turned-politician, who promised big tax cuts as a candidate, told reporters he personally would not gain financially from the proposal.
“I think there’s very little benefit for people of wealth,” said Trump, who, unlike many of his White House predecessors, has refused to make public his own tax returns.
A comprehensive rewrite of the US tax code has eluded previous presidents and Congress for decades. The last one was passed in 1986 under then-US president Ronald Reagan, a Republican.
Trump’s plan falls short of the sweeping, bipartisan package crafted by Reagan and congressional Democrats, analysts said.
The White House said that, under the proposal, typical middle-class families would have less income subject to federal tax.
Trump said the first US$12,000 earned by an individual and the first US$24,000 by a married couple would be tax-free.
The plan would lower the top individual tax rate, paid by the nation’s top earners, from 39.6 percent to 35 percent.
It would lower the top corporate income tax rate from 35 percent to 20 percent. Many US-based multinationals pay much less than the headline rate because of abundant loopholes and tax breaks.
Trump has appealed to Democrats to back the plan, although they were not consulted in drafting it.
Democrats said the plan would expand the federal deficit in order to deliver tax cuts to wealthy Americans rather than the middle-class families that Trump and Republicans say they are trying to help.
“If this framework is all about the middle class, then Trump Tower is middle-class housing,” said Senator Ron Wyden, the top Democrat on the tax law-writing Senate Finance Committee.
The Committee for a Responsible Federal Budget, a Washington-based policy group, on Wednesday said the plan contained about US$5.8 trillion of total tax cuts over a decade and would have a net cost of US$2.2 trillion through 2027.
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