Donald Trump unveils ambitious plan to overhaul US tax system

Trump Proposes the Most Sweeping Tax Overhaul in Decades

In front of his supporters, US President Donald Trump presented a “historic”, he said, “a tax reduction plan for the American people.”

“We are going to return jobs and welfare that many Americans think have left our country forever,” the head of the White House said to the stormy applause. After these promises, the whole America sat down to the calculators, trying to assess what Trump’s initiatives mean for each US citizen separately and for the country as a whole. “The current American president is the world leader in distraction,” the Financial Times said. According to some analysts, having announced Thursday on the tax reform, Trump tried to switch the society from the discussion of the bitter reality for the White House to the failure of the third and, perhaps, the last attempt to abolish the Obama health care reform in Congress.

By introducing a tax reform, which, judging by its scale and disputable places, will affect all residents without exception, the US president immediately transferred the center of political discussions in the country to the financial sphere. “Trump supporters are very attached to him, because during the last six months they saw that he is fulfilling election promises,” the Atlantico newspaper said. Indeed, opinion polls show: 96 percent of those who voted for Trump did not disappoint in their candidate. And this despite the fact that none of the bill promised by the head of the White House, which required approval of the congress, was adopted. In addition to abolishing Obamacare, the president promised to pass laws on tax reduction, on combating offshore companies, on affordable childcare and the elderly, on American energy and infrastructure. Nevertheless, the relatively prosperous state of the economy and the low level of unemployment convince the voters who supported Trump in the election of the correctness of his economic strategy. What can not be said about the other half of America, perceiving the beginnings of the head of the White House into hostility and seeing a dirty trick in his economic programs.

Democrats already call Trump’s plan a concession to rich US residents

Unlike the project of the tax reform of President Ronald Reagan (80s of the last century), which represented a 500-page work, the Trump reform fit on one page and, according to meticulous journalists, in 250 words. The document outlined only the main parameters of the forthcoming innovations, giving legislators the opportunity to further work out the most significant issues. Therefore, more important were the assessments that accompanied their theses (otherwise the commentators proposed by Tramp reform are not called) the head of the White House and key representatives of the administration. The US president argued that the tax reform “will bring very little benefit to rich Americans.” A reduction in the corporate income tax rate below the average of other developed countries will enable American companies to outperform foreign competitors and start winning again. According to Trump, from the reform “the greatest benefit will be working people from the middle class.” Finance Minister Stephen Mnuchin believes that the loss of budget revenues from the reform will be offset by America’s economic growth to 3 percent a year.

However, opponents of the initiatives put forward by Tramp have already called the document presented by him “an unscrupulous tax plan that will lead to tax cuts for one percent of the richest.” However, the main difficulty for Trump’s critics is the lack of specificity of presidential initiatives: as Reuters notes, the plan says very little about how the White House is going to compensate for the drop-out costs – and these are trillions of dollars. Experts close to the Congress warn: not only Democrats, but also Republicans, advocating strict fiscal discipline, are not delighted with the plans voiced by Trump, the implementation of which could result in an increase in the 20-trillion national debt. As a result, according to the Wall Street Journal, the discussion of the tax reform project will turn into a tug-of-war between lawmakers, lobbyists and the presidential administration: after all, the Democrats already call Trump’s plan a concession to the rich inhabitants of the United States. “A strong difference in tax rates generates unscrupulous tax planning,” the Wall Street Journal quotes the expert as the head of the Reagan Tax Office.

What Trump suggested

  1. Instead of seven income tax rates, leave three – 12, 25, 35 percent (rich Americans now pay at a maximum rate of 39.6 percent).
  2. Eliminate the inheritance tax of the family business.
  3. Reduce the income tax from 35 to 20 percent. The same rate should be introduced for individual entrepreneurs and owners of limited liability companies, who are now paid from their income at tax rates for individuals.
  4. Reduce the tax for the return of the profits of transnational American campaigns (the size of the decline is not indicated).
  5. To abolish the tax of 35 percent on the profit earned abroad by American companies.

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