Published: Mon, May 01, 2017
U.S. | By Rene Hicks

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

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

"In order for a corporate income tax cut to 15 percent to be self-financing, it would have to raise the level of growth to 2.8 percent on average", he said.

The new tax proposal proposes to bring down the corporate tax from the current 35 per cent to 15 per cent, significantly lower individual tax rates, and eliminate several tax rates like the death tax. "But other tax benefits will be eliminated".

Cutting taxes for wealthy American is something Trump promised not to do during his campaign. He points out that tax cuts didn't pay for themselves or unleash a great economic renaissance under President George W. Bush or more recently in the state of Kansas.

Treasury Secretary Steven Mnuchin said the new tax proposal will offer "the biggest tax cut and the largest tax reform in the history of this country". He said, "The president's view on this has been very clear" and " the American people understood it " when they elected him.

The president's proposal marks a rehash of an economic theory popularized in the 1980s.

Some economists agree, but most budget experts say it's unlikely.

And despite pledges to the contrary, there's no evidence that the massive tax cuts would lead to significant job creation or economic growth, never mind the kind that would cover the revenue loss - up to $7 trillion over the next 10 years.

So here are five major questions we're still asking about the plan. The US has one of the highest corporate tax rates in the world, which is responsible for the "tax inversions" and other corporate financial manipulations that keep revenues from US corporations overseas.

Mark Wilson  Getty Images News  Getty Images
Mark Wilson Getty Images News Getty Images

When Mnuchin last week unveiled the Trump administration's tax plan, which would benefit wealthy people like Trump, it renewed calls for the president to unveil his tax information.

Kauffman said the plan lacked details and did not address how it would be financed. The real estate magnate might save millions of dollars in his personal taxes because of the changes.

While the rest of us would see some tax relief, it's hard to say how much, since the plan doesn't include any income thresholds for the new tax brackets. Ron Wyden, or OR, ranking Democrat on the Finance Committee.

Gary Cohn said the standard deduction for a married couple would be doubled to $24,000. A big one here would be the elimination of the ability to deduct state and local taxes, a move that could hurt residents of high-tax states such as California and NY.

"The issue is that we are working with the House and the Senate, and our objective is to turn this into a bill that will pass, and the President will sign", Mnuchin said. Trump has proposed repealing the alternative minimum tax.

The proposal has yet to be vetted for its precise impact on top earners, as several specifics are still being determined.

But if a tax cut is temporary, that is less effective for encouraging business owners to make new investments.

In 401 (k) plans, individuals get to contribute income before it is taxed.

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