WASHINGTON (CN) – The Trump administration on Wednesday announced the loose outline of a tax reform package that includes a deep cut to the corporate income tax and a reduction of the number of tax brackets for individuals.
Among the key points of the plan, as outlined in a one-page sheet handed out to reporters on Wednesday, is a slashing of the corporate tax rate from 35 to 15 percent and a reduction of the number of tax brackets from seven to three. The lowest tax bracket would tax income at a 10 percent rate, the middle at 25 percent and the top at 35, according to the White House.
Small businesses would also be eligible for the lower corporate rate, which would go from one of the highest for a major economy to among the lowest. The plan would also repeal the estate tax, long a goal of conservative policymakers, as well as the alternative minimum tax.
“We have a once in a generation opportunity to do something really big,” Director of the National Economic Council Gary Cohn said during a press briefing at the White House on Wednesday. “President Trump has made tax reform a priority and we have a Republican Congress that wants to get it done and this is something I hope the Democrats would support too, because it’s good for the American people.”
The White House also says its plan will simplify filings for individuals by increasing the standard deduction and will close loopholes while also repealing an Obamacare tax on investments. Secretary of Treasury Steve Mnuchin said the plan would also include the “sweeping reform” of eliminating all deductions for individuals other than those for mortgage interest and charitable giving.
Some details of the plan were not clear based on the rough outline provided reporters. Mnuchin said the White House is still working with Congress to iron out some of the bill’s specifics. For example, the Trump administration has not figured out at what rate to tax dollars held overseas or how the plan will slash rates without adding to the deficit, though Cohen and Mnuchin promised specific numbers later.
“We will be working very closely, as I said, with the House and the Senate to turn this into a bill that can be passed and the president can sign and there’s lots and lots of details that will be going into how it will pay for itself,” Mnuchin said.
But the tax package could face a tough path through Congress, as Democrats came out fiercely against even the small glimpse the Trump administration provided on Wednesday. Sen. Ron Wyden, the top Democrat on the Senate Finance Committee, called the plan “self-serving and elitist” on Twitter, while also criticizing it for being light on details.
“At a time when income distribution is getting even worse in America, the president’s outline clearly makes life easier for the wealthy and special interests and makes life harder for middle class and lower income Americans,” Senate Minority Leader Chuck Schumer said in a statement. “It couldn’t come at a worse time.”
Republicans and conservative groups, however, have rallied around the proposal, saying it is a first step towards a tax reform bill that will help juice the economy.
“The principles outlined by the Trump administration today will serve as critical guideposts for Congress and the administration as we work together to overhaul the American tax system and ensure middle-class families and job creators are better positioned for the 21st century economy,” Senate Majority Leader Mitch McConnell, Speaker of the House Paul Ryan, Senate Finance Committee Chairman Sen. Orrin Hatch and House Ways and Means Committee Chair Rep. Kevin Brady said in a joint statement.
On Tuesday McConnell said Republicans anticipated needing to use budget reconciliation to get Trump’s tax plan through Congress. Requiring just a majority in support, reconciliation can be used once a year often on the most controversial pieces of legislation. Cohen on Wednesday indicated the White House is prepared for the fight.
“This isn’t going to be easy, doing big things never is,” Cohn said during Wednesday’s press briefing. “We will be attacked from the left and we will be attacked from the right, but one thing is certain: I would never, ever, bet against this president. He will get this done for the American people.”