President Donald Trump’s tax plan unveiled Wednesday calls for cutting the corporate rate to 15% from 35% and a one-time 15% tax on overseas profits, while individual tax rates would be simplified to three rates and most deductions eliminated, except those for retirement savings, home ownership and charitable donations.
The loss of other deductions for individuals would be offset by doubling the standard deduction to the first $24,000 that a couple makes, and creating a deduction for dependent care, National Economic Council Director Gary Cohn said at a press briefing. “We are going to eliminate most of the tax breaks that mainly benefit high-income individuals,” he said. The plan also calls for eliminating the death tax, but Mr. Cohn said details on tax rates for pass-through entities such as private equity partnerships are still being worked out.
On the corporate side, Treasury Secretary Steven Mnuchin said at the briefing that the president’s plan represents “a massive tax cut for businesses and massive tax reform in simplification.” The one-time tax on overseas profits “will bring back trillions of dollars,” he said.
Asked how the reform package will be paid for, Mr. Mnuchin said that while there are still many details to work out, “this will pay for itself with economic growth and reduction of different deductions and closing loopholes.”
Mr. Cohn said that Mr. Trump and his advisers have been meeting with congressional leaders as recently as last night. “We have agreed on many of the important principles of tax reform,” he said. The White House also plans to launch a listening tour to get public feedback.
“We are determined … to get this done this year,” said Mr. Mnuchin.
Ways and Means Committee Ranking Member Richard Neal, D-Mass., said in a statement that the tax proposal’s broad outline short of details “would disproportionately favor the wealthy and large corporations at the expense of our nation’s hardworking middle class. Despite what this administration might say, the notion that large tax cuts pay for themselves is a fallacy.”
Annette Guarisco Fildes, president and CEO of the ERISA Industry Committee in Washington, said its members are pleased that retirement benefits were left intact, but are still worried about congressional proposals “that call for dramatic changes to the retirement system in America, such as replacing pre-tax contributions with after-tax Roth contributions.”