Yesterday the Trump administration released its tax-reform plan, which the White House is calling the “biggest individual and business tax cut in American history”. National Economic Director Gary Cohn, left, accompanied by Treasury Secretary Steve Mnuchin, speaks in the briefing room of the White House, in Washington, Wednesday, April 26, 2017, where they discussed President Donald Trump tax proposals.
“The last time tax law was changed significantly was back in 1986 under the Reagan administration”, said Timothy Ness, the owner of Ness Tax & Bookkeeping Service in Sioux Falls.
There is also a proposal to levy a 10 per cent tax on the more than US$2.6 trillion (S$3.6 trillion) in earnings that USA companies are estimated to have stockpiled offshore, Bloomberg said.
An analysis from the Tax Policy Center of Trump’s plan during the campaign – which the new plan is based on – found that 51 percent of the plan’s benefits would go to the wealthiest 1 percent of taxpayers.
The leader of the majority party State Senate Republicans, John Flanagan, said in a statement that while he supports the idea of tax cuts, he has “grave concerns” about eliminating the state and local tax deductions. Corporations would not be required to pay taxes on overseas profits. ‘He promised to lower taxes for the middle class. The standard deduction for married couples would double under the plan.
Cohn said Trump and his administration recognize they have to be “good stewards” of the federal budget.
“The question is, what is the revenue shortfall generated by it and how much of that will be plugged through economic growth versus some other source of revenue?”
“Families with six or more individuals in them could be at a disadvantage because they might actually lose money under the current proposal”, Ness said.
While Congress will likely pass some elements, there isn’t much chance President Trump will be able to get all of the items on his tax reform wish list.
“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.
Pressed repeatedly about Trump’s tax returns, Mnuchin refused to pursue the topic. No other state except NY had a higher proportion of income deducted due to state taxes.
In 2014, state residents claimed $68 billion in itemized deduction for state and local taxes, a total second only to those claimed by residents of California, according to IRS statistics cited in the report.