(Adds comments from Republican leadership, Democrats, details)
By Amanda Becker and Ginger Gibson
WASHINGTON, April 26 U.S. President Donald Trump
on Wednesday proposed slashing tax rates for businesses and on
overseas corporate profits returned to the country in a plan
that his fellow Republicans in Congress generally welcomed but
viewed as an opening gambit.
The Trump administration touted the president's blueprint -
which also calls for raising standard deductions for
individuals, reducing the number of tax brackets and repealing
inheritance taxes on estates - as a landmark proposal just days
before Trump marks his 100th day in office on Saturday.
While Republicans, who control the House of Representatives
and the Senate, have long eyed tax cuts, Trump's proposal may be
unpalatable to party fiscal hawks. It lacks plans for raising
new revenue and could potentially add billions of dollars to the
The proposals were unveiled at the White House by Trump
economic adviser Gary Cohn and Treasury Secretary Steve Mnuchin,
who called them "core principles" that would be worked on with
Congress to produce a bill that can be passed.
The planned cuts would pay for themselves through economic
growth, and by reducing tax deductions and closing loopholes,
"Our objective is to make U.S. businesses the most
competitive in the world," he said. "The president is determined
to unleash economic growth for businesses."
House Speaker Paul Ryan, Senate Majority Leader Mitch
McConnell and the top Republicans on the congressional
tax-writing committees welcomed the proposals, while leaving
space for details to change as legislation evolves.
“The principles outlined by the Trump Administration today
will serve as critical guideposts" as Congress and the
administration work on changes to taxation, they said in a
Details of Trump's plan emerged before the formal
announcement. Ryan, a longtime champion of a major tax
restructuring, expressed optimism about it on Wednesday morning,
even though it did not include a "border adjustment" tax on
imports that he has pushed. That idea was part of initiatives
floated by House Republicans as a way to offset revenue losses
resulting from steep tax cuts.
"We're in agreement on 80 percent and on the (remaining) 20
percent we're in the same ballpark," he said.
Senior Democrats assailed the plan, including its
underpinning ideology of "trickle-down" economics.
Ron Wyden, the top Democrat on the Senate tax committee,
called it "unprincipled" and said it would produce tax cuts for
the wealthy, conflicts for the president because of his own
business interests, "crippling debt for America and crumbs for
the working people."
U.S. stocks pared gains on Wednesday after the plan was
unveiled. While Wall Street has been optimistic about the
prospect of corporate tax cuts since Trump's election in
November, the stocks rally has stalled lately because of a lack
of clarity about Trump's policies and concern over his failure
to push through a healthcare bill.
Some analysts said investors were aware of the long road
ahead before any tax bill is passed.
"We have a pretty good idea that he (Trump) is targeting
lower corporate taxes, lower individual taxes and a
simplification of the process, but all that is in an ideal
world," said Andre Bakhos, managing director at Janlyn Capital
in Bernardsville, New Jersey. "The market will not interpret the
plan negatively, but there are obstacles in that course, just
like with anything that Trump says and does."
Trump's plan would cut the income tax rate paid by public
corporations to 15 percent from 35 percent and reduce the top
tax rate assessed on pass-through businesses, including small
partnerships and sole proprietorships, to 15 percent from 39.6
percent, the White House said.
While public corporations' profits or losses are taxed
directly, "pass-through" businesses are taxed under the
individual income tax code.
Mnuchin also said that Trump was proposing that
corporations bring offshore profits into the country at a rate
well below the current 35 percent rate. He did not say what that
rate would be, but said the administration was working with
Congress on a low rate.
About $2.6 trillion in profits are being held tax-exempt
abroad by U.S. multinationals under a rule that says they are
only taxable if brought into the United States, or repatriated.
Trump proposes requiring repatriation, but at the lower rate.
If enacted, the measure would produce a one-time surge in
revenue that could be dedicated to infrastructure spending, an
idea that could attract votes from Democrats.
For individual U.S. taxpayers, the Trump plan would simplify
tax returns by reducing the number of tax brackets to three (10
percent, 15 percent and 35 percent) from seven and double the
standard deduction available to taxpayers who do not itemize
Democrats and fiscal-hawk Republicans will be concerned
about how much Trump's proposals would cause the deficit to
balloon. To minimize that impact, Republicans will rely heavily
on "dynamic scoring," an economic modeling method that attempts
to predict economic growth and new tax revenues resulting from
"The overall economic plan consists of massive tax cuts and
tax reform, regulatory relief and renegotiating trade deals, and
with that we will unlock the economic growth that’s been held
back for too long in this country,” Mnuchin said.
Business groups including the U.S. Chamber of Commerce
welcomed the proposal, while noting it was just the start of
potential changes to taxation.
The Retail Industry Leaders Association, comprising some of
the nation's largest retailers, including Wal-Mart Stores Inc
, Target Corp and Best Buy Co Inc,
praised the call for a lower tax rate and reiterated opposition
to the idea of the border adjustment tax, which some companies
fear would raise consumer prices.
The No. 2 Democrat in the Senate, Dick Durbin, attacked the
tax proposal and the fact Trump, a wealthy New York real estate
developer, had declined to make public his personal tax returns.
"President Trump should release his own tax returns if he
wants to have any credibility in a debate about America’s tax
code," Durbin said. Mnuchin said on Wednesday that Trump did not
intend to release his tax returns.
(Additional reporting by Steve Holland, David Lawder, Doina
Chiacu, Eric Walsh; Writing by Doina Chiacu and Frances Kerry;
Editing by Jonathan Oatis and Peter Cooney)