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Republicans push for major tax cuts Trump to outline major tax cut plans
(35 minutes later)
Top Republicans say they are united in a push to lower taxes, as a longstanding effort to overhaul the US tax code takes centre stage. US President Donald Trump will call for major tax cuts for business in a speech later, as a longstanding Republican effort to overhaul the US tax code takes centre stage.
Top Republicans released a framework for the tax overhaul earlier.
They are looking for a policy win, after repeated failure to reform the US healthcare system.
Among the planned changes is a cut in the corporation tax rate from 35% to 20%.Among the planned changes is a cut in the corporation tax rate from 35% to 20%.
US President Donald Trump is scheduled to deliver a speech to muster support for the effort later on Wednesday. US Treasury Secretary Steven Mnuchin described the document released on Wednesday as a template that Congress will use to craft legislation.
Lawmakers are looking for a major policy win, after repeated failure to reform healthcare. In addition to the corporate tax cut, the negotiators said they have agreed to change the tax on overseas profits and create a top 25% rate for small businesses and firms organised as "pass-through entities" such as limited liability corporations.
The Trump administration had earlier pledged to achieve tax reform taxes before the end of August.
But it has been tough to reach agreement on even the broad goals released on Wednesday. Democrats are opposed to cuts for the wealthy and some conservatives are worried that cuts will add to the deficit.
A so-called "Big Six" team of negotiators have spent months meeting to thrash out a plan, with the aim of simplifying the code and cutting rates, especially for businesses.
US Treasury Secretary Steven Mnuchin called the document released on Wednesday a template that Congress will use to craft legislation.
On the business side, the negotiators have agreed to reduce the corporate tax rate from 35% to 20%, change the tax on overseas profits and create a top 25% rate for small businesses and firms organised as "pass-through entities" such as limited liability corporations.
For families, negotiators plan to nearly double the amount individuals and families can deduct, increase the tax credit for children and introduce a new tax credit for dependents who are not children, such as the elderly or disabled. They will also eliminate a tax on inheritance.For families, negotiators plan to nearly double the amount individuals and families can deduct, increase the tax credit for children and introduce a new tax credit for dependents who are not children, such as the elderly or disabled. They will also eliminate a tax on inheritance.
Trump dines with Democrats to talk taxTrump dines with Democrats to talk tax
Trump: 'It's time' for tax reform - TrumpTrump: 'It's time' for tax reform - Trump
US tax reform: Tough task for TrumpUS tax reform: Tough task for Trump
Lawmakers plan to preserve tax incentives for homeownership, retirement, education, as well as research and development. The Trump administration had earlier pledged to achieve tax reform taxes before the end of August.
Administration officials said they intend to eliminate many tax benefits, including exemptions for state and local taxes, but those are not specified. But it has been tough to reach agreement on even the broad goals released on Wednesday, many of which are familiar from earlier proposals.
Democrats oppose cuts for the wealthy and some conservatives are worried that cuts will add to the deficit.
A so-called "Big Six" team of negotiators have spent months meeting to thrash out a framework, with the aim of simplifying the code and cutting rates, especially for businesses.
Many details still need to be worked out.Many details still need to be worked out.
For example, lawmakers want to slim the number of tax brackets to three - with filers charged at a 12%, 25% or 35% rate - but what incomes would qualify for each rate remains to be seen.For example, lawmakers want to slim the number of tax brackets to three - with filers charged at a 12%, 25% or 35% rate - but what incomes would qualify for each rate remains to be seen.
Currently, the bottom rate is 10% and the top rate is close to 40%.Currently, the bottom rate is 10% and the top rate is close to 40%.
White House officials rejected the idea that the plan would increase the tax burden on lower income families, citing the increased amount households will be able to deduct.White House officials rejected the idea that the plan would increase the tax burden on lower income families, citing the increased amount households will be able to deduct.
They also said that the framework leaves Congress the flexibility to maintain a fourth, higher rate on the wealthiest households.They also said that the framework leaves Congress the flexibility to maintain a fourth, higher rate on the wealthiest households.
Lawmakers are also grappling with how to pay for the tax cuts.Lawmakers are also grappling with how to pay for the tax cuts.
Administration officials said they intend to eliminate many tax benefits, including exemptions for state and local taxes, but those are not specified.
Lawmakers plan to preserve tax incentives for homeownership, retirement, education, as well as research and development.
The Trump administration maintains that closing loopholes will help offset revenue loss.The Trump administration maintains that closing loopholes will help offset revenue loss.
They also say the reform will spur growth, but many economists say it is unlikely to be enough to close the gap, adding to the US debt, which has passed $20 trillion. They also say the reform will spur growth.
The ideas shared on Wednesday are familiar from earlier Republican proposals and are similar to principles the Trump administration has backed since the presidential campaign. Economists say it is unlikely to be enough to close the gap, meaning that the plan will add to the US debt, which has passed $20 trillion.