The Trump administration on Wednesday announced what it claimed to be "one of the biggest tax cuts in American history", through drastically reducing tax rates both in the business and individual categories, fulfilling one of its major election promises.
It proposes to bring down the corporate tax from the current 35 per cent to 15 per cent, significantly lower individual tax rates, and eliminate several tax rates like the death tax.
This would "unlock" the American economy, give a big boost to businesses, create jobs and bring trillions of dollars stacked overseas by its companies, US Treasury Secretary Steven Mnuchin told reporters at a joint White House News conference with the National Economic Director Gary Cohen.
"This tax reform package is about economic growth and creating jobs," Cohen said as he and Mnuchin outlined the growth of the tax cuts announced by the Trump administration.
"Today we are putting out the core principles," Mnuchin said.
For individuals, the Trump administration proposes to reduce the existing seven tax brackets to three tax brackets of 10 per cent, 25 per cent and 35 per cent; doubling the standard deduction and provide tax relief for families with child and dependent care expenses.
It simplifies to eliminate targeted tax breaks that mainly benefit the wealthiest taxpayers, protects the home ownership and charitable gift tax deductions, repeals the Alternative Minimum Tax, repeal the death tax and repeals the 3.8 per cent Obamacare tax that hits small businesses and investment income.
In addition to a flat 15 per cent business tax rate, the Trump administration proposed territorial tax system to level the playing field for American companies, one-time tax on trillions of dollars held overseas and eliminate tax breaks for special interests.
Throughout the month of May, the Trump administration will hold listening sessions with stakeholders to receive their input and will continue working with the House and Senate to develop the details of a plan that provides massive tax relief, creates jobs and makes America more competitive- and can pass both chambers.
(With PTI inputs)