President Donald J. Trump vowed to eliminate "the loopholes and complexity that primarily benefit the wealthiest Americans and special interests," and to focus on alleviating the "crushing tax burden on companies and workers."
In a speech on August 30, 2017 in Springfield, Missouri, President Trump criticized "obstructionists" in Congress, and claimed he is committed to working with both Republicans and Democrats to develop a comprehensive tax reform plan. President Trump said that a reformed tax code must be simple and comprehensible, contribute to the global competitiveness of the United States, provide tax relief for middle-income households, and bring back trillions of dollars by making operations in America more attractive to businesses.
In addition, the White House released a fact sheet titled "President Donald J. Trump Tackles Our Broken Tax System." The fact sheet lays out President Trump's plan to simplify the tax code, close special-interest loopholes and increase global competitiveness. The fact sheet lists examples of "out-of-control" burdens presented by the existing tax system, and criticizes America's corporate tax rates in comparison to those of other countries.
Commentary / Mark Howe
An estimate of the likelihood of tax reform, or of significant tax legislation, must take account of both fiscal and political factors, including the following: (i) the fiscal reality of a 20 trillion dollar national debt accruing at a rate of 1 trillion every 2 years, (ii) passage of tax reform solely by Congressional Republicans that would require 96% of Senate Republicans and 88% of House Republicans to sign on, (iii) current Republican-proposed rate reductions resulting in a very small percentage of the tax cuts going to the core Trump constituency of middle- and lower-income households, (iv) no proposals or alternative sources of revenue to compensate for the tax cuts, and (v) no tie to any reduction of entitlement payments.
Currently, given these considerations, the Administration appears to be focusing on a scaled-down version of limited tax cuts focused on middle-income taxpayers and business enterprises (rate reductions for large businesses geared to international competitiveness and further rate reductions for smaller businesses) along with a hunt for eclectic revenue-raisers (like limiting deduction for state and local taxes, mark-to-market for derivatives or carried interest).
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