These two charts show what's wrong with Trump's tax proposal

Senate Budget Plan Would Allow $1.5 Trillion in Increased Deficits                 

     

     Wikimedia Commons

Senate Budget Plan Would Allow $1.5 Trillion in Increased Deficits Wikimedia Commons

Over a decade, Trump's plan would cut business taxes by $2.6 trillion (the red bars), and lose another $240 billion by repealing estate and gift taxes (the yellow bars).

Analysts were skeptical that Congress could approve a tax bill this year, but that is what Republicans hope to achieve so they can enter next year's congressional election campaigns with at least one legislative achievement to show for 2017.

"Despite the president's promises, it is implausible that this plan would permanently boost the economy", Howard Gleckman, a senior fellow at the Tax Policy Center, wrote in the report.

If the new lower top rate were to be approved, Trump would see a 4.6 percent tax cut, estimated to be worth $17.48 million, provided that he would consider paying his taxes, that is.

Mike Feller, of Hudson, said he thinks the tax plan is geared toward benefiting wealthy people, not the middle class.

At an event in Indianapolis, Trump called the plan the largest tax cut in USA history.

The plan would lower the top individual tax rate, paid by the nation's top earners, to 35 per cent from 39.6 per cent. The American middle-class family of four could take advantage of a heftier child tax credit and other deductions but face uncertainty about the rate its household income would be taxed.

Trump has appealed to Democrats to back the plan, although they were not consulted in drafting it.

Trump and congressional Republicans unveiled the broad outlines of the tax plan earlier this week.

For example, the President wants to end the estate tax, which only affects a few thousand uber-wealthy families each year - individual estates larger than $5.49m, and $11m for couples.

Trump touted several provisions in the tax plan that could benefit manufacturers, including a reduction in the corporate rate to 20%, a tax break for investment in new equipment and a low, one-time repatriation tax for profits held overseas. If you own your own business, you'd only benefit from the cap if you would otherwise be subject to a tax rate higher than 25%. About 95 percent of the businesses in the USA are structured as pass-through companies. Under his proposal, mortgage interest and charitable giving would still be deductible.

It's pretty astounding to go around talking about the need for a middle-class tax cut and then produce a plan that reserves almost all its benefits for the wealthy while raising taxes on tens of millions of middle-income Americans. That could especially hurt people in high-tax states like California and NY.

The president also highlighted the tax proposal's reduced tax rates for pass-through businesses - companies ranging from mom-and-pop grocers to hedge funds whose profits flow as income to their owners, who then pay taxes based on their own individual rates.

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