WASHINGTON (CBSNewYork/AP) — President Donald Trump wants to simplify the personal tax code by cutting rates and eliminating deductions used by more affluent Americans.
White House economic adviser Gary Cohn said the plan would cut the top income tax rate from 39.6 percent to 35 percent. It also would reduce the number of personal income tax brackets to three from seven. The new tax rates would be 10 percent, 25 percent and 35 percent.
The plan would trim other deductions used by high-income Americans, including state and local tax payments.
“The repeal of local and state income tax deduction would hurt a lot of Tri-State residents because there’s a lot of high incomes here,” USA Today’s Money Editor Philana Patterson tells CBS2. “That would take the ability to deduct those expenses away which would increase tax liability.”
It would also repeal the estate tax, the dreaded alternative minimum tax — which hits tens of thousands in New York and New Jersey — and the 3.8 percent tax on investment income from President Barack Obama’s health care law.
“The AMT creates significant complications and burdens that require taxpayers to do their taxes twice to see which is higher,” Cohn said. “That makes no sense and we should have one simple tax code.”
The plan would double the standard deduction for married couples to $24,000, while keeping deductions for charitable giving and mortgage interest payments, and slash the top corporate and business rate to 15 percent.
Critics call that a giveaway that will balloon the deficit, while supporters say it will ignite an economic boom that will grow jobs and increase tax revenue.
Holding a single piece of paper Wednesday, Mayor Bill de Blasio ripped the proposed tax plan.
“Here is the extraordinary one page reform of American taxation,” he said. “This is a pipe dream.”
According to de Blasio, the plan is clearly written by billionaires for billionaires.
“Look at the highlights, you know, cutting corporate tax rates, and you know, getting rid of the quote unquote death tax that’s the estate tax,” he said, “that’s a tax that overwhelmingly is on the wealthiest Americans.”
In a statement sent following the plan’s announcement, Senator Kirsten Gillibrand (D-N.Y.) said “any true tax reform should accomplish three things: reward work, rebuild the middle class, and stem the tide of economic inequality.”
“Unfortunately, the Trump tax plan fails all three tests,” the statement continued. “Instead, his administration proposes massive tax cuts to profitable multinational companies. His plan would irresponsibly harm taxpayers and middle class families who ultimately will pay the price for those huge corporate giveaways.”
City Comptroller Scott Stringer called the tax plan “a gift to the Mar-a-Lago crowd.”
“For New York City, with the potential elimination of local and state tax deductions, this plan would do serious damage. This isn’t a plan to deliver growth – it’s a recipe to destabilize our economy and widen the gaps between the wealthiest and those most in need,” Stringer said in a statement. “Slashing corporate tax rates to 15 percent, as the president proposes, will result in massive budget deficits that could and will be offset by dramatic funding cuts.”
Federal tax practitioner David Selig believes simplifying the tax code will benefit both the wealthy and the working class. Even still, he has questions on what’s to come.
“In a state like New York, New Jersey, California, you really pay through the nose for the privilege of living here,” he tells CBS2. “In fact, if we lose those deductions, and we don’t know if we will for sure yet, that will be a kick in the patute for a lot of people.”
Many of the specific details are in short supply, and the Trump administration says everything is up for negotiation.
The president’s top economic adviser says Trump is seizing a “once in a generation opportunity” to do something big on taxes.
“Tax reform is long overdue, we are going to cut taxes for businesses to make them competitive and we’re going to cut taxes for the American people especially low and middle income families,” Cohn said. “The president is going to seize this opportunity by leading the most significant tax reform legislation since 1986 and one of the biggest tax cuts in American history.”
At a discussion earlier Wednesday at the Newseum, Treasury Secretary Steve Mnuchin called the plan the “biggest tax cut and largest tax reform in the history of our country.”
“The president is determined to unleash economic growth for business,” he continued. “This is not just about large corporations, small and medium sized businesses will be eligible for the business rate as well.”
Wednesday’s announcement served as the start of a process that will play out over the next eight months or so — the president has said he hopes to rap up negotiations with Congress on tax reform by the end of the year.
The big concern is what effect his plan would have on the deficit. The administration says it’s running the numbers and promises more details in the weeks ahead.
Meanwhile, Republicans are defending Trump’s first 100 days as “productive” on many fronts.
Speaker Paul Ryan made the case that reform of government regulations has been a major success of the president’s first 100 days.
“We are providing relief for energy jobs, for small businesses, for retirees,” he said. “It’s been estimated that the steps we have taken with this administration will save families and businesses $67 billion.”
Also Wednesday, there will be an unusual gathering of all 100 United States senators at the White House for a briefing on tensions with North Korea.
“I am hoping to hear a clearer strategy about where we are going,” said Democratic Delaware Sen. Chris Coons.
“I think it will be very irresponsible for any president to allow the missile program to mature to the point that it could hit America,” said South Carolina Republican Sen. Lindsey Graham. “And I don’t believe Donald Trump is going to let that happen.”
Secretary of State Rex Tillerson is heading to New York and the United Nations, looking for help from China and Russia to contain North Korea.
A new CBS News poll shows only 27 percent of Americans think North Korea is a threat requiring immediate military action.
The same poll shows Trump with a 41 percent job approval rating, with 41 percent of Americans saying they are “excited or optimistic” about what the president is doing. Fifty-seven percent say they are “concerned or scared.”
(© Copyright 2017 CBS Broadcasting Inc. All Rights Reserved. The Associated Press contributed to this report.)