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Trump's Tax Plan: 12 Reactions You Need to Read

28 September 2017

Doubles the standard deduction for married taxpayers filing jointly to $24,000, and $12,000 for individuals.

The new top tax rate for small businesses will be 25 percent.

For Republicans who have been scarred by the experience of seeing tax cuts lead to fiscal shortfalls in states, such as Kansas, South Carolina and Tennessee, Indiana represents a case study of where tax cuts worked.

It will be hard to tell who gets the tax cuts under the plan until lawmakers release a complete tax bill and independent analysts examine how the distribution of the tax burden differs from today's tax system.

Trump's tax reform team - which includes House speaker Paul Ryan, Senate majority leader Mitch McConnell, National Economic Council director Gary Cohn, Treasury secretary Steven Mnuchin, Senate Finance Committee chairman Orrin Hatch, and House Ways and Means Committee chairman Kevin Brady - has its work cut out.

It was forged during months of high-level talks among Mr Trump's aides and top Republicans in Congress, but offered scant details about how to pay for the cuts without dramatically driving up federal deficits. On Wednesday, President Donald Trump unveiled his administration's tax plan, called the "Unified Framework For Fixing Our Broken Tax Code".

Aimed at simplifying the system, cutting taxes for the middle class and offering friendly rates to businesses, the plan from Trump and congressional Republicans hopes to speed up economic growth by presenting, as the president has labeled it, "a super competitive" tax structure to lure jobs to the U.S.

Trump added that such a cut in the corporate rate would "bring jobs back into our country", a premise that many economists question. This opens the door for wealthy Americans to incorporate as a business, and thus pay the lower tax rate.

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The Washington Post says White House advisers are divided over whether to cut the top individual rate, and GOP leaders are trying to design a forthcoming plan that would ensure the wealthy don't get too large a share of tax relief. The U.S. will see itself lose $1.0 trillion in revenue over the next 10 years if the tax plan passes through Congress. The White House and congressional leaders have considered giving up on a push to repeal the estate tax.

The framework is the product of the so-called Big Six of USA policy makers on taxes: House Ways and Means Chairman Kevin Brady (R., Texas), Senate Finance Chairman Orrin Hatch (R., Utah), Treasury Secretary Steven Mnuchin, White House economic policy chief Gary Cohn, Senate Majority Leader Mitch McConnell (R., Ky.) and House Speaker Paul Ryan (R., Wis.).

He said lawmakers should expect a "very, very powerful document" that would deliver a big tax cut for the middle class.

Republicans have been discussing collapsing the current seven individual tax brackets into three, with a top rate of 35%.

For example, lawmakers want to slim the number of tax brackets to three - with filers charged at a 12%, 25% or 35% rate - but what incomes would qualify for each rate remains to be seen. The most notable is the deduction for payment of state and local taxes, which would be a big hit to residents of states with high taxes and wealthy residents. Also, the child tax credit would be substantially increased.

The plan also calls on the tax committees to eliminate most of the tax credits that businesses now use. But it doesn't set the income levels at which the rates would apply, so it's unclear just how much of a tax change there might be for a typical family, and whether its taxes would be reduced.

-The estate tax-which taxes a deceased person's estate before it is distributed to his or her heirs-and the alternative minimum tax-which establishes a baseline even for those rich entities that have used loopholes or exemptions to reduce their income tax-would be gone.

Trump's Tax Plan: 12 Reactions You Need to Read