Nearing his 100-day mark, US President Donald Trump disclosed a one-page plan that proposes deep tax cuts, a move intended to please multinational corporations and wealthy taxpayers who would benefit from these tax cuts. However, his plan is not the comprehensive tax reform that Democrats and Republicans have been seeking to bring for years. Should his plan be enacted, it would increase the fiscal deficit. It had a cautious reception from fiscal conservatives and financial markets.
The plan, unveiled at the White House by Trump economic adviser Gary Cohn and Treasury Secretary Steve Mnuchin, is close to what Trump had promised in his campaign for the presidential elections.
The Democrats attacked the plan as being “fiscally irresponsible”. “President Trump’s tax plan is short on details and long on giveaways to big corporations and billionaires,” said Nancy Pelosi, the top Democrat in the House of Representatives.
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%. While the current tax rate is at 35%, most corporation end up paying about 20% after tax credits and other loopholes, as calculated by JPMorgan. Trump’s plan would further replace the current seven income tax brackets with three, and the top bracket would drop from 39.6 percent to 35 percent.
House Speaker Paul Ryan accepted the proposal. “The principles outlined by the Trump administration today will serve as critical guideposts” as Congress and the administration work on tax changes, they said in a statement.
The US stocks also showed gain after Trump unveiled the plan. However, concerns in the stock market remain after the loss of the Healthcare Bill in the Senate.