A new tax reform plan being hashed out behind closed doors by six top Republican leaders and White House officials will reportedly max out the tax rate for the wealthiest Americans to a flat 35 percent.
The plan, dubbed the “Big Six” because of those behind it, will apply a dramatic reduction on taxes for large and small businesses, and reduce the current seven income tax brackets to only three, in an effort to simplify the entire tax program.
Axios published a report Saturday evening with leaked details of the initial framework of the plan, which is being put together by House Speaker Paul Ryan, Senate Majority Leader Mitch McConnell, Treasury secretary Steven Mnuchin, White House economic adviser Gary Cohn, and the chairmen of the two tax-writing committees — Senate Finance Committee chairman Orrin Hatch and House Ways and Means chairman Kevin Brady.
According to the report, President Trump will be unveiling the framework of the new tax plan during a speech in Indiana on Wednesday.
Included in the leaked details are the following:
- Current seven tax brackets to be reduced to only 3.
- Top individual tax rate reduced from 39.6 to 35. (Rates for the other two brackets are yet unknown.)
- Corporate tax rate cut from 35 percent to 20 percent.
- Rules included which will prevent wealthy people from “rearranging their affairs” to be taxed at the small business rate.
- Standard deduction to be doubled, which will be a boost for the middle class.
The outline to be announced is said to just be a starting point for the tax reform process, and is expected to change as it goes through the House and Senate.
During a press briefing on September 5, President Trump said, “It is vital that we reduce the crushing tax burden on our companies on our workers. We pay the highest tax of any country in the world on businesses, and we can’t keep doing that.”
“First we must make the tax code as simple as possible,” Trump said. “It’s extremely complex, not fair and extremely hard to understand.”
“We must provide tax relief for middle class workers and families, restore our competitive edge so we can have real job growth throughout America,” the president continued. “We can’t be the jobs magnet of the world if we continue to tax our industries at rates 60 percent higher than companies in other countries.”
“Finally, we must bring back trillions of dollars that are currently parked overseas,” President Trump said, confirming his plan is more than just tax reform – it is tax cutting.
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