Closing in on his 100th day in office, President Donald Trump has said he wants to unveil a tax reform plan perhaps as early as Wednesday.
The tax code is just way, way, way too complicatedUS Treasury Secretary
That is much earlier than administration officials were planning and there has speculation that Trump will just announce tax cuts without detailing how the shortfall to tax revenues would be covered.
Big TAXREFORMANDTAXREDUCTION will be announced next Wednesday.— Donald J. Trump (@realDonaldTrump) April 22, 2017
Wall Street analysts say that could be a package of rate reductions, like those backed by Reagan in 1981 and President George W. Bush in 2001, which left the tax system intact.
If that is the case, it “is not tax reform. It is a tax cut,” Chris Krueger, analyst at financial firm Cowen & Co, said in a research note.
In a speech to Congress in February Trump said: “Right now American companies are taxed at one of the highest rates anywhere in the world. My economic team is developing historic tax reform that will reduce the tax rate on our companies so they can compete and thrive anywhere and with anyone.”
The US federal tax rate for companies is 35 percent – plus what individual states levy. Reportedly Trump wants it cut to 15 percent, which is more than the 20 percent proposed by lawmakers in his Republican party.
For individuals, there are currently seven different tax rates depending on the level of income, ranging from 10 percent to 39.6 percent. The Trump plan is to reduce that to three rates – 12, 25 and 33 percent.
US Treasury Secretary Steven Mnuchin recently said: “One of the things I do in my job is oversee the IRS, Internal Revenue Service, which reports to the treasury. The tax code is just way, way, way too complicated. And we want to create a system where the average American can do their taxes on a postcard not a major book.”
Mnuchin admitted the proposed tax changes would add trillions to the US government’s deficit but claimed that eventually “the tax plan will pay for itself with economic growth”.