President Trump on Wednesday announced his administration’s long-awaited tax overhaul initiative at the Indiana State Fairgrounds.
Four Indiana lawmakers accompanied the President on the trip that included Republican Representatives Susan Brooks and Jackie Walorski, Republican Senator Todd Young, and Democratic Senator Joe Donnelly.
“Tax reform has not historically been a partisan issue and it does not have to be a partisan issue today,” Trump said. “There is no reason that Democrats and Republicans in Congress should not come together to deliver this giant win for the American people and begin the middle class miracle once again.”
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The plan, an “America First Tax RELIEF PLAN” includes lower tax rates for individuals, providing relief to middle class American families and lower small business tax rates, giving a boost to millions of American businesses and farms and lower corporate tax rates, making American business more competitive.
Since Vice President Pence’s 2013 tax cuts, as Governor of Indiana, unemployment in Indiana has been cut in half and more than 200,000 jobs have been created and President Reagan’s 1986 corporate income tax cut contributed 3.3 percent to economic growth over ten years, according to the Tax Foundation.
Concerning middle class workers, the changes include:
Double the standard deduction so that more income is taxed at zero percent in which the first $12,000 of income for an individual and $24,000 for a married couple will be tax-free.
Consolidate the seven existing tax brackets for taxable income to only three brackets: 12 percent, 25 percent, and 35 percent.
Increase and expand the Child Tax Credit to benefit more middle-income families and eliminate the marriage penalty.
Create a new $500 tax credit for those caring for an adult dependent or elderly loved one.
In terms of filing, the vast majority of Americans will be able to file their taxes on a single sheet of paper due to the fact that individuals and businesses spend more than 6 billion hours complying with the tax code, according to the National Taxpayer Advocate.
The plan also repeals the Alternative Minimum Tax, which requires many taxpayers to do their taxes twice and ends the job killing “Death Tax.”
Concerning the burdening business rates, the plan will reduce the corporate tax rate to 20 percent.
The United States corporate income tax rate is the highest in the Organisation for Economic Co-operation and Development (OECD), and has been above the OECD average for almost 20 years.
The United States corporate income tax rate is more than 10 points higher than China’s, according to the Congressional Budget Office (CBO).
The plan will also reduce the top tax rate paid by sole proprietors, S corporations, and partnerships to 25 percent.
For the next five years, American businesses will be able to immediately write off the cost of their equipment and other capital investments.
Economists have agreed that America’s corporate tax rate harms America’s workers by keeping their wages down. More than 70 percent of the corporate tax burden falls on American workers, according the CBO.
The Trump administration plan to propose an “American Model” that will bring back trillions of dollars held overseas and restore America’s competitive edge. Profits that have accumulated offshore will be subject to a one-time low tax rate, thereby ending the tax incentive to keep those profits offshore.
To avoid paying high U.S. corporate taxes on foreign profits, American companies have often reinvested their money abroad instead of repatriating it to U.S. shores.
Companies hold an estimated $2.8 trillion in earnings offshore, according to Audit Analytics.
This plan, according to the Trump administration will stop the so-called, “Offshoring Model,” which penalizes companies for incorporating in the United States.
“If we want to renew our prosperity, restore our opportunity, and reestablish our economic dominance, which is what we should be doing, then we need tax reform that is pro-growth, pro-jobs, pro-worker, pro-family, and, yes, pro-American,” Trump said.
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