Trump tax plan: Slash corporate and individual tax rates

US President Donald Trump called Wednesday for a dramatic cut in USA corporate taxes to boost job growth in the world's largest economy and massive reforms in the country's complex tax code that could affect millions of American taxpayers.

While the tax cuts may produce a short-term boost to the economy and add fuel to a stock market rally, it falls short of the comprehensive tax reform that Trump had pledged earlier. The plan cuts the maximum corporate tax rate from 35 percent to 15 percent, a clear potential savings.

Trump's tax proposal would also lower the capital gains tax rate and would decrease the number of income tax brackets from seven to just three, while lowering the tax rate for the wealthiest individuals by almost 4 percentage points. "It's going to put people back to work". As of right now, however, the wealthy appear to be the only winners in the new tax plan.

Gary Cohn, the president's chief economic advisor who unveiled the plan along with Mnuchin, dubbed it "the most significant tax reform legislation since 1986, and one of the biggest tax cuts in American history".

CRFB estimates that to pay for the plan, United States growth would need to be sustained at 4.5 percent annually, a level not seen on a sustained basis since the late 1960s and early 1970s. "Doing big things never is", Cohn admitted.

One of the most high profile policy promises made by the President on the campaign trail was ambitious tax reform.

Cohn said he expects a long fight over the measure.

Mnuchin said no tax rate has been set yet on the repatriated money earned by US companies overseas, but that he is working with lawmakers to determine what it should be.

That rate has yet to be finalized. He also did not include any mention of the highly controversial border adjustment tax, which also formed part of Trump's campaign pledges.

House Speaker Paul Ryan accepted the proposal. "So every time you move to the private sector, it's going to have an exponential effect", Di Pietro said.

Democrats sounded an immediate warning to the White House.

Many more details are to come, but from the broad-brush presentation by Treasury Secretary Steven Mnuchin, it sounds like if you have a business you'll likely benefit from the Trump Tax proposals. But he also wouldn't rule out that middle class people could actually see their taxes rise under the plan. He and other administration officials left the room as reporters shouted questions about how the plan would affect the Trump family. And we will be lowering the rate on the high end in return for eliminating nearly all deductions. Under the current system, a California family in the 25 percent federal income bracket that deducted that much in state income taxes would reduce their federal taxes by around $1,100.

The proposal suggests cutting the income tax rate of public corporations and that paid by "pass-through" businesses, including partnerships, S corporations and sole proprietorships to 15%.

"Trump's tax plan is a rerun of the failed supply-side economics that exploded our deficit during the George W. Bush administration", said Rep. Bill Pascrell (D-9th Dist.), a member of the House Ways and Means Committee that has juridiction over tax issues.

"The difference between 1.6 percent, 1.8 percent GDP and three percent is staggering", Mnuchin said. "It's tons of jobs".

CRFB doesn't buy it, noting that even if tax cuts create more growth than it estimates, there's "no plausible amount" that can offset the lion's share of the plan's cost.