Trump’s Tax Plan Cuts Rates for Individuals and Corporations

By ALAN RAPPEPORT and THOMAS KAPLAN
© 2017 New York Times News Service

WASHINGTON — The Trump administration on Wednesday proposed the most sweeping changes to the federal tax code in decades, outlining a framework that would cut individual and corporate taxes, eliminate widely used exemptions and deductions and tilt the United States closer to the type of tax system embraced by other industrialized nations.

But the framework leaves many of the toughest decisions to Congress, including how to pay for a plan that could add trillions of dollars to the federal deficit, how progressive it should be and which prized deductions to jettison.

President Donald Trump planned to unveil the tax plan in a speech Wednesday in Indiana, where he will position it as a win for the middle-class and a tool to stimulate economic growth. Senior administration officials who briefed reporters on the proposal said the White House was fully aligned with the tax-writing committees in the House and Senate. Republicans are racing to pass a tax bill by the end of the year as they look to secure their first major legislative achievement since taking power this year.

While the Republican leadership claims to be unified on the tax plan, they must now sell it to lawmakers who have proven to be deeply divided this year.

Democrats and progressive groups swiftly denounced the tax plan as a false promise to the middle class.

“If this framework is all about the middle class, then Trump Tower is middle-class housing,” said Sen. Ron Wyden, D-Ore.

After months of secret talks, the proposal produced by the so-called Big Six working group provides as many questions as it does answers. Without those details, it is difficult to say whether middle-income families will see the most benefit from the tax overhaul or if it will favor the richest Americans.

On the individual side, the plan would collapse the tax brackets from seven to three, with tax rates of 12 percent, 25 percent and 35 percent, administration officials said. The current top rate is 39.6 percent and the lowest rate is 10 percent.

The proposal calls for reducing the corporate tax rate to 20 percent from 35 percent, a shift that is intended to make U.S. companies more competitive with their counterparts around the world.