President Donald Trump urged lawmakers last week to push forward with tax legislation “ASAP,” telling them not to wait until the end of September. Tax reform was a key platform of the agenda Trump pitched as a presidential candidate, and he has delivered two recent speeches regarding the benefits of changes he plans to make to the U.S. tax system.
Trump’s reform promises to slash personal income taxes. He also plans to slim down the corporate tax rates to 15 percent and instigate a one-time repatriation program in an effort to encourage companies to bring back cash parked overseas.
Treasury Secretary Steve Mnuchin said Trump’s goal of taking the corporate tax rate down to 15 percent might not be possible. “I don’t know if we’ll be able to achieve that, given the budget issues,” he told CNBC on Tuesday, but he insisted that a tax overhaul will happen this year.
“We’re going to get this done by the end of the year,” Mnuchin vowed, adding that the administration is “super focused” on the goal, following the three-month debt limit and government funding extension passed last week.
“But we’re going to get this down to a very competitive level,” Mnuchin said.
The Senate Finance Committee will hold a hearing on Thursday on individual tax reform. Sen. Orrin Hatch, the committee’s chairman and one of the six primary tax negotiators, said he expects to share the plan with other lawmakers after that and other hearings.
— Donald J. Trump (@realDonaldTrump) September 7, 2017
Gary Cohn, chief economic adviser to President Trump and Director of the National Economic Council, laid out the administration’s plans to make America’s tax process easier and — most importantly — cheaper.
“In 1935, we had a one-page tax form consisting of 34 lines and two pages of instructions. Today, the basic 1040 form has 79 lines and 211 pages of instructions. Instead of a single tax form, the IRS now has 199 tax forms on the individual side of the tax code alone. Taxpayers spend nearly 7 billion hours complying with the tax code each year, and nearly 90% of taxpayers need help filing their taxes,” Cohn pointed out.
He said the new plan will cut taxes and simplify the tax code by taking the current seven tax brackets we have today and reducing them to only three brackets: 10 percent, 25 percent, and 35 percent.
He further detailed:
We are going to double the standard deduction so that a married couple won’t pay any taxes on the first $24,000 of income they earn. So in essence, we are creating a 0 percent tax rate for the first $24,000 that a couple earns.
The larger standard deduction also leads to simplification because far fewer taxpayers will need to itemize, which means their tax form can go back to that one simple page.
Families in this country will also benefit from tax relief to help them with child and dependent care expenses.
We are going to repeal the Alternative Minimum Tax (AMT). The AMT creates significant complications and burdens by requiring taxpayers to do their taxes twice to see which is higher. That makes no sense; we should have one simple tax code.
Job creation and economic growth is the top priority for this Administration, and nothing drives economic growth like capital investment. Therefore, we are going to return the top tax rate on capital gains and dividends to 20 percent by repealing the harmful 3.8 percent Obamacare tax. That tax has been a direct hit on investment income and small business owners.
We are going to repeal the death tax. The threat of being hit by the death tax leads small business owners and farmers in this country to waste countless hours and resources on complicated estate planning to make sure their children aren’t hit with a huge tax when they die. No one wants their children to have to sell the family business to pay an unfair tax.
We are going to eliminate most of the tax breaks that mainly benefit high-income individuals. Home ownership, charitable giving, and retirement savings will be protected – but other tax benefits will be eliminated.
Cohn acknowledged that a big change like this won’t be easy, but he expressed his faith in President Trump, stating, “I would not bet against this president. He will get this done for the American people.”
Alfredo Ortiz, president and CEO of the Job Creators Network, a non-partisan organization founded by entrepreneurs, is also looking forward to a new American future, so long as the GOP is able to pass middle class and small business tax cuts, calling it their “last great hope to save their first year agenda” in a Fox News opinion piece that ran last week.
Ortiz cited recent Gallup polls showing that “significant” middle class tax cuts are supported by a majority of Americans. He states that a tax cut “is the most direct way to boost wages” and provide middle class families relief in that a tax cut would improve wages by providing small business employers the funds to provide a pay raise.
“Whether your politics are left, right, or center, this is something we can all agree on: More money in more Americans’ pockets is a good thing for everyone,” he wrote.
A tax cut for American small businesses would allow entrepreneurs to keep more of their earnings, which would, in turn, restore vitality to Main Streets in communities across the country, Ortiz pointed out.
“Consider the results of a recent Job Creators Network nationwide poll of small business owners: Most respondents said they would reinvest their tax cut savings in the form of employee wage hikes, new hires, and expansion,” he said.
This suggests a tax cut could address the problem of stagnating wages twice. First, by directly giving all hardworking taxpayers an immediate raise in their take home pay. Second, by allowing small business employers the funds to provide a pay raise.”
Tax cuts will mean an economy where anything is possible and where anyone can achieve the American Dream. https://t.co/vVG3Lroq1A
— Vice President Pence (@VP) September 7, 2017
In order to highlight the substantial benefits of a tax cut for American small businesses, families, and communities, Job Creators Network is launching a major tax cut campaign, which includes a nationwide bus tour with a rally stop at the IRS building in Washington D.C.
The message is simple, said Ortiz: “Pass a tax cut retroactive to January 1, and give working and middle-class Americans a bigger paycheck by returning some of the money the government took from them last year – hundreds of dollars a month – to their wallets today.”