President Donald Trump put together a team of tax negotiators to create and propose tax policy that would reduce marginal tax rates from individuals and businesses, increase standard deductions and decrease tax expenditure. The plan includes tax cuts for people with a high income and for business with large revenue. The republican tax plan proposes increases to the Earned-Income Tax Credit.
The group working on the new tax policy is Gary Cohen, the National Economic Council director, Steven Mnuchin, the Treasury secretary, Mitch McConnell, the Senate majority leader, Senator Orrin Hatch, the Senate Finance Committee chairman, Paul Ryan, the House speaker, and Representative Kevin Brady, the House Ways and Means Committee chairman.
Businesses can expect to see changes that include a 20 percent corporate tax rate down from the current 35 percent corporate tax rate, a 25 percent rate for pass-through businesses, elimination of some business deductions and industry specific incentives.
Individuals can expect a low-income rate of 12 percent rather than the current 10 percent, a mid tax bracket of 25 percent, top bracket rare of 25 percent, the possible introduction of a fourth tax bracket, elimination of most itemized deductions, increased size of the child tax credit, elimination of state and local tax deductions and elimination of the estate tax.
Evaluations have shown that the plan will likely increase the federal deficit by $2.4 trillion within the first decade of it’s implementation. Most of this lost revenue would be as a result of the proposed cuts to corporate and business taxes. Overall revenue from individual taxes would increase.
The plan will likely increase the ease of filing taxes by decreasing the inherent complications that come with the allowance of deductions, while increasing their effective tax rate. There is an expectation that 80 percent of the benefit seen from the tax plan would go to people in the top 1 percent.
Senate Republicans plan to pass a tax-reform bill using budget reconciliation, which would allow for it to pass with a simple majority, avoiding a Democratic filibuster.