Trump Administration Proposes 'Massive' Tax Overhaul And Tax Cut Plan

The answer to that question may determine whether Trump's recommended 15 percent corporate tax rate - a huge cut from the current 35 percent - would be permanent or temporary.

The four Republican leaders who met at the White House Tuesday night, Paul Ryan, along with Ways and Means Chairman Kevin Brady, Senate Minority Leader Mitch McConnell and Finance Chairman Orrin Hatch, released a joint statement addressing the tax reform plan.

Dr Oliver also said that the move in the USA to lower tax rates may lead to a global push for tax cuts, since the superpower generally sets the direction on tax cuts and other economic initiatives. "As the president (Donald Trump) said during the campaign, we will lower the business rate to 15 per cent; we will make it a territorial system; we will have a one-time tax on overseas profits, which will bring back trillions of dollars that are offshore to be invested here in the U.S., to purchase capital and to create jobs", Mnuchin said.

"This will pay for itself with growth and with reduction of different deductions and closing loopholes", Mnuchin said, brushing aside assessments that the tax cuts would add to the cumulative US debt, not reduce it. In 2018 alone this action would cut the tax bill for corporations from $340 billion to $125 billion, a direct injection of $215 billion onto their bottom line.

Unfortunately, this very simple concept is usually oversimplified.

If Trump's proposals became law, depending on the details, growth could accelerate more quickly, Harris added.

In contrast, the US economy appears to have slowed, with economists expecting the advance reading of US GDP on Friday to show its growth slowing to 1.2 per cent in the first quarter from 2.1 per cent in the preceding quarter. That would mean USA companies would only owe US tax on what they earn in the United States. For example, Ronald Reagan's tax breaks in the 1980s spurred an economy growth spurt. It's not going to hurt the wealthy tax payer.

"It's clearly fiscally reckless and it's a massive tax cut for the richest", said Chuck Marr, the director of federal tax policy at the Center on Budget and Policy Priorities, a Washington policy group that focuses on measures to fight poverty.

The US Congress inched toward a deal to fund the government through September but was preparing to possibly extend a midnight Friday deadline in order to wrap up negotiations and avoid an imminent government shutdown.

He also warned that a plan that dramatically shrinks tax revenues would "explode the deficit". Instead, Republicans are pushing for tax cuts and increased defence spending.

The tax plan's impact on the deficit and debt will be key to winning backing on Capitol Hill.

Tax experts said far more details were needed to determine how average Americans would be affected.

But the one-page plan, billed as the biggest tax cut in history by the administration, offered no specifics on how it would be paid for without increasing the deficit, which many analysts think would be hard to achieve.

President Donald Trump's massive tax-cut proposal would slash taxes on hundreds of businesses he and his family own.

However, Democrats are not too keen to jump aboard.

Cohn said the White House is proposing to double the standard income tax deduction to $24,000 for a married couple.

"Well designed tax cuts can spark growth, especially in the short run, and especially when the economy is operating at less than full capacity", he said.

Aside from most large companies, many partnerships and small businesses would benefit because they're structured as pass-throughs, which derives from the fact that they pass on their profits to their owners. The only itemized deductions that would be preserved under the plan would be for home mortgage interest and charitable contributions.

"Most Americans... will wind up with a little more money, and there are going to be a few Americans, at the upper end, who will wind up with a lot of money", Miller said.

"You don't know what the bracket cutoffs are, so you can't compare them to current law", said Alice Abreu, a tax law professor at Temple University.

Such a move would hurt high-tax states, which tend to vote Democratic, such as NY and California, where the state and local tax deduction is a major item, said some tax analysts. The Earned Income Tax Credit (EITC) is a welfare program but some libertarian economists favor it, claiming it provides incentives for work.

If the latter occurs, it could spark an economy boost, Irwin explains.

But so far the plan is pretty thin on details.