Trump, Republican Tax Overhaul Plan Revealed: Rates Cut, Deductions Nearly Doubled

WASHINGTON (CBSNewYork/AP) — President Donald Trump and congressional Republicans are proposing a far-reaching plan to cut taxes for individuals and corporations, simplify the tax system and nearly double the standard deduction used by most Americans.

“Too many in our country are shut out of the dynamism of the U.S. economy, which has led to the justifiable feeling that the system is rigged against hardworking Americans,” says the blueprint, obtained by The Associated Press. “With significant and meaningful tax reform and relief, we will create a fairer system that levels the playing field and extends economic opportunities to American workers, small businesses, and middle-income families.”

Congressional Republicans say the tax overhaul plan would create a fairer system that levels the playing field and extends economic opportunities to the working class and their families, but there are also perks for the wealthy as well, CBS2’s Hazel Sanchez reported.

“These tax cuts are significant. There’s never been tax cuts like what we’re talking about,” Trump said Wednesday in Indiana.

The plan nearly doubles the standard deduction to $12,000 for individuals and $24,000 for families. This basically increases the amount of personal income that is tax-free.

“We’re doing everything we can to reduce the tax burden on you and your family,” Trump said. “We will ensure that the benefits are focused on the middle class.”

“Put another way – taking money out of Washington and putting it in the pockets of our citizens,” Senate Majority Leader Mitch McConnell, R-KY, added.

It collapses the number of personal tax brackets from seven to at least three.

The rates would be 12 percent, 25 percent and 35 percent, essentially reducing the tax rate on the nation’s richest and increasing the tax rate on the poorest. But the plan does not set the income levels at which the rates would apply, so it’s unclear just how much of a tax cut would go to a typical family.

Congress would also have the option of adding a fourth bracket for high-earners, which tax experts say could mean the wealthy end up paying more.

“With the elimination of the state and local tax deduction, for people in the Tri-State Area, they’re going to be paying a much higher level tax,” Patrick Daley, with Citrin Cooperman CPA, said. “They’re losing their deductions and keeping their tax rate the same.”

The administration says the tax proposal is focused on helping middle class families and will significantly increase the child tax credit and income limits would be modified so the credit is available to more middle income families.

The plan would also seek to help families by calling for a higher tax credit and limiting the marriage penalty on the joint income of couples who both work.

Deductions for mortgage interest and charitable giving would remain, but the plan seeks to end most itemized deductions that can reduce how much affluent families pay.

The estate tax — which is levied on millionaires — would be eliminated, a likely boon for wealthy individuals who inherit businesses, investments and real estate.

Sen. Kirstin Gillibrand, D-N.Y., called the proposal “a cruel joke to working people.”

Senate Minority Leader Chuck Schumer, D-N.Y., agreed.

“Under this plan, the wealthiest Americans and wealthiest corporations make out like bandits, while middle class Americans are left holding the bag,” he said.

Companies would find themselves paying substantially lower tax rates, part of an effort to make U.S. businesses more competitive globally.

Corporations would see their top tax rate cut from 35 percent to 20 percent. For a period of five years, companies could further reduce how much they pay by immediately expensing their investment in capital goods.

“So that American companies and American workers can beat our foreign competitors and start winning again,” Trump said.

New benefits would be given to firms in which the profits double as the owners’ personal income. They would pay at a 25 percent rate, down 39.6 percent. This creates a possible loophole for rich investors, lawyers, doctors and others, but administration officials say they will design measures to prevent any abuses.

The administration says say the tax plan is focused on helping middle class families. But — despite six months of talks with congressional leaders — the outline still lacks vital details about how middle class families would fare. There are also signs that the wealthiest sliver of Americans could still reap tremendous benefits from the proposed changes, even though Trump has suggested that rich will not be better off.

Congressional Republicans initially promised the tax plan would not add to the nation’s debt, but a budget watchdog group in Washington says the new GOP tax plan could cost $2.2 trillion over the next 10 years.

(© Copyright 2017 CBS Broadcasting Inc. All Rights Reserved. The Associated Press contributed to this report.)

More From CBS New York

CELEBRATING 50 YEARS
Get Our Morning Briefs
Bloomberg WCBS Tri-State Business Index

Watch & Listen LIVE