Trump Might Need Democrats' Support For Tax Reform

Ethan Harris, chief global economist at Bank of America Merrill Lynch, says such a "crowding out" effect can cancel out any benefits to the economy.

The " phenomenal" tax plan that President Donald Trump promised nearly 11 weeks ago appeared at a White House briefing Wednesday: It was a one-page list of bullet-points that amounted to fewer than 250 words.

The plan would aid lower- and middle-class families by cutting individual tax rates and doubling the standard deduction.

Across Connecticut, business leaders reacted to Trump's highly-touted tax plan with tempered optimism, but the state's Democratic congressional delegation blasted the proposal as a give-away to corporations at the expense of the middle class.

Treasury Secretary Steve Mnuchin says President Donald Trump "has no intention" of releasing his tax returns to the public.

In one of the biggest tax cuts in American history, President Donald Trump has proposed slashing the United States tax rate on corporate and pass-through business profits to 15 per cent from 35 per cent or more, while also offering tax cuts to average Americans in a rough outline of his tax policy goals.

Studies of the results of past tax holidays found that most of the offshore cash brought home by USA companies was used to buy back shares or make acquisitions, not to fund investments in production capacity or jobs. And the president is focused on creating economic growth.

"We would have the freedom to set the competitive tax rates and embrace the policies that would attract the world's best companies and biggest investors to Britain", Prime Minister Theresa May said in January.

Moreover, the hotly debated border adjustment tax that featured in the House blueprint published a year ago, looks not to have made it into this proposal. As you mentioned this would be historic tax cuts. Mnuchin said the administration would include provisions to keep wealthy business owners of large companies from taking advantage of the lower rate, but did not offer details.

Core principles of the plan, unveiled on Wednesday, rely heavily on so-called "dynamic scoring", a budget analysis method that assumes tax cuts will boost economic activity, thus generating more revenues. But with the tax plan limiting most deductions, it could expose more of an average American household's income to taxes.

President Trump proposes to protect the home ownership and charitable gift tax deductions.

The corporate tax cuts are also meant to encourage more businesses to stay in the United States, which now has the highest corporate rate among advanced economies.

U.S. tax changes, including possible tariffs on imports, would "lure more Chinese manufacturers to invest in the USA and undermine the competitiveness of Chinese exports", said Zhu Ning, deputy dean of Tsinghua University's financial research institute. "It's basically along exactly the same lines that we want to go", Ryan said. The proposal also mentions about eliminating tax breaks for special interests. There is a White House plan hanging out there that would seemingly deliver huge tax cuts for the rich and create a gusher of red ink, but with no hope in the short term of passing it.

Mnuchin: We do. We have had lots of discussions with the leadership and the House and Senate. Len Burman, an institute fellow at the Urban Institute, was more pointed: "First draft of Reagan tax reform: three-volume 500+ page treatise".

"There is no doubt that if you are a NY or California resident, your largest deduction, by a factor that could be as high as 10, is the state and local income tax", said tax expert Robert Willens, of New York-based Robert Willens LLC.