The Trump administration has finally outlined its new tax proposal, which leans heavily on tax cuts.
So far, President Trump wants to slash individual tax rates — cutting the top rate from 39.6% to 35% — and reduce the number of total rates from seven to three. He also wants to cut the top tax rate for all businesses to 15%, far below the current top rates.
The administration’s tax outline still leaves many questions unanswered and will be met with a lot of skepticism among lawmakers, even though Republicans control Congress. In fact, some GOP aides suggest that the White House — with its emphasis on tax cuts and too few details on how they’d be paid for — is not constructively contributing to a serious discussion of tax reform.
“It’s not tax reform,” one senior GOP aide told CNN. “Not even close.”
Here’s what we know so far about the president’s tax proposal.
Lower individual income tax rates: The proposal calls for reducing the number of tax brackets from seven to three for individuals, which would be set at 10%, 25% and 35%. Today’s rates are 10%, 15%, 25%, 28%, 33%, 35% and 39.6%.
But here’s the thing: The White House has yet to specify how much of one’s income would apply to each of the three rates that Trump is proposing. So it’s impossible to say what the change would mean in dollars and cents for anyone.
During the campaign, Trump had originally called for those rates to be 10% 20% and 25%. He later amended his plan, calling for somewhat higher rates to match what House Republicans have been calling for: 12%, 25% and 33%.
The proposal also calls for doubling the standard deduction.
Treasury Secretary Steven Mnuchin said Wednesday morning that the new tax proposal will offer “the biggest tax cut and the largest tax reform in the history of this country.” Without greater detail from the White House, that’s impossible to verify.
Much lower business rates: Trump wants to slash the top tax rate for all businesses to 15%, as he proposed during the campaign. That’s well below the top rate of 35% for corporations today, although the real top rate they pay is less after tax breaks.