Irish businesses reassured over Donald Trump tax plan

Nick Mcbride
April 28, 2017

This change could represent a significant tax cut for lower middle-class families.

President Trump himself did not issue a statement on the tax overhaul yesterday but on the campaign trail last summer, he previewed his tax proposals.

U.S. President Donald Trump proposed slashing tax rates for businesses to 15 percent from the current 35 percent for public corporations and 39.6 percent for small businesses, and on overseas corporate profits returned to the country.

The No. 2 Democrat in the Senate, Dick Durbin, attacked the tax proposal and the fact Trump, a wealthy NY real estate developer, had declined to make public his personal tax returns. But his ambitious plan alarmed lawmakers who worry about ballooning federal deficits.

"We are going to double the standard deduction, so that a married couple won't pay any taxes on the first Dollars 24,000 of income they earn".

President Donald Trump's team boasted Wednesday that its tax-cut plan would lighten Americans' financial burdens, ignite economic growth and vastly simplify tax filing. Smart reform would also scale back or eliminate economy-distorting tax breaks, like that for home mortgage interest.

In all, New Jersey is among the six states where residents benefit the most from being able to deduct their state and local taxes, according to the Tax Foundation, and more than a third of the state's taxpayers would take a hit worth an estimated $3,500 if state and local taxes can no longer be deducted from federal taxable income, according to the nonpartisan Tax Policy Center.

Worth noting, Mnuchin's words were met with quick opposition from the Republican chair if the House Ways and Means subcommitee on tax policy, who said on CNBC he did want to see "temporary" measures. They'd be more likely to stay headquartered in the USA and bring home earnings generated overseas.

Administration officials intend to finalize details with members of the House and Senate in the coming weeks for what would be the first massive rewrite of the US tax code since 1986. My AEI colleague Alan Viard has a co-authored a plan offsetting such a deep rate cut by raising taxes on dividends and capital gains received by American shareholders. US companies now hold more than $2 trillion in profits overseas. "And it is time for hard work to be rewarded and not punished by an outdated system". It would also slash the corporate rate from 35 percent all the way to 15 percent, a boon to most companies even though many don't pay the full tax now.

"There were big tax cuts under Ronald Regan, and that of course led to tax cuts globally, including in Australia globally", he said.
"I can't imagine any New Jersey legislators supporting this proposal". "If today Switzerland has an effective tax rate of between 10% and 15%, then Trump wants to compete with them and with lowering the tax to 15% and other tax plans that he is proposing, he is offering a very attractive package that will significantly channel operations to the United States".

Details of Trump's plan emerged before the formal announcement.

In Kansas, Gov. Sam Brownback eliminated state taxes on pass-throughs, which turned out to be a boon for Bill Self, the coach of the University of Kansas' men's basketball team.

Under the deferral system, USA companies have stockpiled an estimated $2.6 trillion offshore to avoid paying US taxes on it - though Trump has said repeatedly that he thinks the amount is higher.

So what Trump has done is offered a cobbled-together, detail-light plan that is sub-optimal for growth while also managing to generate a tidal wave of red ink. But we're talking about reducing revenue to a nation whose reckless presidents and Congresses have accumulated just under $20 trillion in taxpayer debts.

Owners, partners and shareholders of so-called pass-through entities pay taxes for their businesses on their individual tax returns at a top tax rate of 39.6%.

"Despite claiming to be a champion for small businesses, President Trump clearly champions little but his own bottom line and that of his friends", Ballantyne said.

But it's unclear whether or how the corporate-tax proposals would be paid for; Mnuchin has said economic growth resulting from tax cuts would cover much of the cost, but economists question that assertion.

Other reports by VgToday

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