WASHINGTON, D.C. — The GOP on Wednesday announced plans to overhaul the U.S. tax code, including sharply reduced tax rates on businesses and the middle class.
If approved, the proposed legislation (https://www.speaker.gov/press-release/unified-framework-fixing-our-broken-tax-code) would boost household incomes for millions of Americans by nearly doubling the standard IRS deduction used by most tax payers. The plan would increase the standard deduction to $12,000 for individuals and $24,000 for families, essentially doubling the amount of personal income that would be considered tax-free.
For mid size corporations, the plan calls for a tax rate at 20% and elimination of the corporate AMT (alternative minimum tax). The new maximum tax rate for business income of small and family-owned businesses (undefined) would be capped at 25%.
The plan would also impose a new, one-tax, lower tax on corporate profits held overseas, and create a new tax structure for overseas business operations of U.S. companies.
“My plan is for the working people and my plan is for jobs,” President Trump said of the plan on Wednesday. When asked by a reporter whether or not he would personally benefit from the proposed tax breaks the president replied,“No, I don’t benefit, I don’t benefit. In fact, very, very strongly, as you see, I think there’s very little benefit for people of wealth.”
“This has been a long time coming,” House Speaker Paul Ryan, (R)-Wis., said at a news conference on Capitol Hill where he pointed out that this type of major tax reform has not been seen in Washington in over 30 years.
“Instead of a source of pride, our tax code has become a constant source of frustration. It’s too big. It’s too complicated. It’s too expensive. Today, we are taking the next step to liberate America from our broken tax code.”
Republicans across the board praise the plan, calling the proposed legislation a giant step in the right direction for the middle class.
“We are moving forward with a unified framework that paves the way for bold, transformational tax reform—tax reform that will bring more jobs, fairer taxes and bigger paychecks,” Rep. Kevin Brady (R., Texas), chairman of the House Ways and Means Committee said of the announcement. “We have a lot of work ahead. But this moment marks a major step forward in the process.”
However, despite the optimism shown by Republicans, Democrats were quick to condemn the plan, claiming it would only benefit the rich and do little to help the poor.
“As the sun rises in the east, so will you have a partisan Republican plan that cuts taxes disproportionately for the well-to-do, the very rich, the top of our economic system,” said Sen. Ron Wyden of Oregon, the top Democrat on the Senate Finance Committee.
Massachusetts Rep. Richard Neal, the top Democrat on the House Ways and Means Committee, echoed Wyden’s comments.
“It’s clear from this plan that when it comes to tax reform, Republicans will always put the wealthy first,” said Neal. “After more than a year of work …. this tax plan would give big tax cuts to the wealthiest Americans.”
Undeterred by the criticism from the left, Mitch McConnell, (R)-Ky, praised Repulican efforts and said the new plan is about “getting America going and growing again.”