US “massive tax cuts and tax reform”

As promised the Trump administration is proposing “massive tax cuts and tax reform”.

Fox News: Mnuchin vows ‘biggest tax cut’ in US history, confirms plan to slash business rate

Treasury Secretary Steve Mnuchin confirmed Wednesday that the Trump administration aims to lower business tax rates to 15 percent, saying a forthcoming proposal will constitute the “biggest tax cut” for Americans in history.

“This is going to be the biggest tax cut and the largest tax reform in the history of our country,” Mnuchin said, as administration officials prepare to outline Wednesday afternoon what he described as “principles” of their tax plan.

Mnuchin, speaking at a Washington forum, would not reveal many specifics but confirmed that they want to lower the business rate to 15 percent.

“I will confirm that the business tax is going to be 15 percent,” he said. “[Trump] thinks that’s absolutely critical to drive growth.”

He indicated that the rate for small businesses and the corporate tax would both drop to 15 percent. The top small business rate is 39.6 percent; the current corporate tax is 35 percent.

Mnuchin also said the administration wants to “do the whole thing,” and not pursue tax reform piece by piece. Amid concerns that such sweeping tax cuts would significantly reduce revenue for the government, he suggested economic growth will help pay for the plan.

But there is no current plan to increase revenue to make up a massive shortfall.

The plan, though, is likely to run into tough questions from Democrats and some fiscal hawks about the impact on the federal deficit and national debt.

On Tuesday, the official scorekeeper for Congress dealt a blow to the argument that tax cuts pay for themselves.

The nonpartisan Joint Committee on Taxation said a big cut in corporate taxes, even if temporary, would add to long-term budget deficits. This is a problem for Republicans because it means they would need Democratic support in the Senate to pass a tax overhaul that significantly cuts corporate taxes.

US tax rates are relatively high and that encourages tax avoidance, so they could attract business back into the US.

They hope that the tax cuts will pay for themselves with economic growth – and at the same time want to clamp down on trade. A huge gamble.

30 Comments

  1. Brown

     /  April 27, 2017

    Nope. History shows that cutting tax rates from ridiculous, rapacious levels does little harm to actual revenue. This is great news as it will see governments forced to compete and be accountable for the waste they encourage. Government works best in the range of 12 – 18% GDP and NZ at 40% is suffering because of the brake that applies.

    • There’s no certainty how cutting tax rates from 35% to 15% will have on tax revenue and business levels.

      It’s almost certain that revenue will drop in the short term, so the US deficit will grow, probably substantially.

      It will be some time before it wil be shown whether tax and business will increase enough to cover deficits, let alone pay back the existing deficit.

      • David

         /  April 27, 2017

        “It’s almost certain that revenue will drop in the short term, so the US deficit will grow, probably substantially.”

        If the rate cut comes with removal of the byzantine tax exemptions and loop holes that permeate the entire US tax code, then it’s quite possible tax revenue will not change at all.

        The different between the headline tax rate and the actual rate of tax paid is huge.

        • What about the cost of enforcing the removal of “byzantine tax exemptions” and closure of loop holes …?

    • “On November 7, 2016, debt held by the public was $14.3 trillion or about 76% of the previous 12 months of GDP. Intragovernmental holdings stood at $5.4 trillion, giving a combined total gross national debt of $19.8 trillion or about 106% of the previous 12 months of GDP.”

      https://en.wikipedia.org/wiki/National_debt_of_the_United_States

      That will increase before it improves.

      • Gezza

         /  April 27, 2017

        With Mnuchin at the helm the 1% will do exceedingly well.

    • Blazer

       /  April 27, 2017

      where exactly does history…show this?

    • Blazer

       /  April 27, 2017

      Trump conned the voters.After his anti Wall St ad he now has the usual suspects Goldman alumni back bigger and bolder than ever.

      • Gezza

         /  April 27, 2017

        Yup. Was there ever really any doubt he would? The Investment Banking Industry bought the US Presidency Fiscal Policy Portfolio for a song decades ago.

  2. David

     /  April 27, 2017

    AT 38% the US corporate rate is no longer competitive and we have already seen numerous companies decide against planned moves overseas on the basis of Trumps reforms (Carrier, Ford, GM, Chrysler, Siemens) so it could well have the Thatcher effect of higher revenue from a lower rate.
    There are trillions sitting offshore that could be repatriated and invested back home and lead to more jobs and given the woeful US participation rates gifted from Obama there are plenty of shovel ready workers.

    • Blazer

       /  April 27, 2017

      the companies that decided not to move!Just like the Kiwis that chose not to…emmigrate.Funny as a …play.

      • David

         /  April 27, 2017

        You make little sense. 2 of the listed companies were through the process of building facilities in Mexico, the CEO of Carrier had handed out redundancy notices and after a call from Trump withdrew them. Blind irrational hatred of Trump is perhaps your thing but dont let the facts slap you in the backside.

        • Blazer

           /  April 27, 2017

          b/s ,I wanted Trump to win just to shake things up.He has reverted to type though=looking after the…wealthy.Whens the wall going to get done?

        • Blazer

           /  April 27, 2017

          btw present your evidence that the Carrier C.E.O had ‘handed out redundancy notices’.All Trump needs to do re Apple and others is offer a one off repatriation of funds deal at a nominal rate.

          • Blazer

             /  April 27, 2017

            still waiting…you make it up as you…go.

  3. David

     /  April 27, 2017

    Cohn said that Americans spend nearly 7 billion hours complying with tax requirements each year, and nearly 9 out of 10 of them can’t file their own returns without help.

    • Gezza

       /  April 27, 2017

      A decent state-funded health system instead of the private insurance-company-rorting mess they have might simplify matters a bit. Those involved in the insurance companies who lose their jobs could retrain to get the skills needed to build the wall or clean pools or pick oranges or smelt or fabricate US steel or do something else useful.

  4. Corky

     /  April 27, 2017

    Tax rates and compliance regulations are greater in America than in socialist Scandinavian countries. Guess how these countries finance their socialist, albeit, crumbling, paradises.

    • Blazer

       /  April 27, 2017

      how do those Scandinavian countries you talk of compare to the U.S on the standard of living…scales?

      • Corky

         /  April 27, 2017

        At the moment, much better. Although people are starting to tire of a lack of disposable income, falling standards and….immigration. It’s all academic anyway. In 20 years time it will be Scandinavistan.

      • David

         /  April 27, 2017

        Well, your chances of dying in a grenade attack are much higher in Sweden than in the US. There are 30 grenade attacks a month in Malmo alone.

  5. Blazer

     /  April 27, 2017

    lowering tax rates for the wealthy is just the tried and failed ‘tickle down theory’….in different clothes.

    • The application of and blind adherence to TINA …

      Next there’ll be depression-style work camps with highway, infrastructure and wall-building ‘chain gangs’ of “shovel ready workers” …

      Tax cuts ain’t gonna pay for that …

      But put the US economy even more on a war footing and maybe things will come right?

  6. duperez

     /  April 27, 2017

    Some detail on here:
    http://www.taxpolicycenter.org/publications/analysis-donald-trumps-tax-plan/full

    And then:
    “…the Republicans’ initial proposals would add trillions of dollars to budget deficits, and funnel more than 99% of the benefits to the top 1% of the income distribution.”

    https://www.theguardian.com/business/2017/apr/10/trump-tax-cut-plan-will-be-as-big-a-flop-as-failed-healthcare-reforms

  7. Corky

     /  April 27, 2017

    Why Trump needs to do something. This ain’t America the Great.

    http://www.dailyjobcuts.com/

  8. Zedd

     /  April 27, 2017

    ‘I see your true colours shining through.. ‘

    more ‘trickle-nowhere’.. except to his cronies pockets

    • Sad to say Zedd, he and his cronies own it all – largely due to the wonderful invention ‘private property rights’ – and in so doing they own us as well …

      • dezz

         /  April 27, 2017

        @P_Z

        I suspect you may have something ?
        I wouldn’t be surprised; ‘New Trumpland’ ??

  1. US “massive tax cuts and tax reform” – NZ Conservative Coalition