WASHINGTON: U.S. President Donald Trump Wednesday proposed slashing tax rates for businesses and on overseas corporate profits returned to the country in a plan greeted as an opening gambit by his fellow Republicans in Congress. The Trump administration touted the president’s blueprint, which also calls for raising standard deductions for individuals, repealing inheritance taxes on estates and simplifying tax returns – as a landmark proposal just days before Trump marks his 100th day in office Saturday.
But while Republicans have long eyed tax cuts and the party controls the House of Representatives and the Senate, Trump’s proposal may be unpalatable to party fiscal hawks. It lacks plans for raising new revenue and could potentially add billions of dollars to the federal deficit.
The plan was unveiled at the White House by Treasury Secretary Steve Mnuchin and Trump economic adviser Gary Cohn.
Mnuchin called the proposals “core principles” that would be worked on with Congress to produce a bill that can be passed. In answer to questions, he said the plan would pay for itself through economic growth, and by reducing tax deductions and closing loopholes.
“Our objective is to make U.S. businesses the most competitive in the world,” he said. “The president is determined to unleash economic growth for businesses.”
Much of the plan had emerged before the formal unveiling. Earlier Wednesday, Republican House Speaker Paul Ryan, a longtime champion of a major tax restructuring, expressed optimism about it, even though it did not include a “border adjustment” tax on imports that he has pushed.
That controversial idea was part of earlier initiatives floated by House Republicans as a way to offset revenue losses resulting from steep tax cuts.
“We’ve seen a sneak preview. We like it a lot,” Ryan told a gathering of lobbyists and lawyers. “It puts us on the same page. We’re in agreement on 80 percent and on the [remaining] 20 percent we’re in the same ballpark.”
Republican lawmakers generally greeted Trump’s plan as a single viewpoint that will start negotiations in Congress and will ultimately be modified if it becomes law.
“I welcome the White House’s initiative on this, it’s a good thing,” Republican Representative Peter Roskam, a member of the tax-writing Ways and Means Committee, told lobbyists.
Senate Democratic leader Chuck Schumer assailed the plan and took a jab at Trump, a wealthy New York real estate developer.
“If the president’s plan is to give a massive tax break to the very wealthy in this country – a plan that will mostly benefit people and businesses like President Trump’s – that won’t pass muster with we Democrats,” he said in a statement.
U.S. stocks pared gains Wednesday after the plan was unveiled. While Wall Street has been optimistic about the prospect of corporate tax cuts since Trump’s election in November, the stocks rally has stalled lately due to a lack of clarity about Trump’s policies and concern over his failure to push through a health care bill. Some analysts said investors were aware of the long road ahead before any tax bill is passed.
“We have a pretty good idea that he [Trump] is targeting lower corporate taxes, lower individual taxes and a simplification of the process, but all that is in an ideal world,” said Andre Bakhos, managing director at Janlyn Capital in Bernardsville, New Jersey. “The market will not interpret the plan negatively, but there are obstacles in that course, just like with anything that Trump says and does.”
Trump’s plan would cut the income tax rate paid by public corporations to 15 percent from 35 percent and reduce the top tax rate assessed on pass-through businesses, including small partnerships and sole proprietorships, to 15 percent from 39.6 percent, the White House said.