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Trump outlines major tax cut plans Trump outlines major tax cut plans
(about 17 hours later)
US President Donald Trump has called for major tax cuts as part of a longstanding Republican effort to overhaul the US tax system.US President Donald Trump has called for major tax cuts as part of a longstanding Republican effort to overhaul the US tax system.
A framework released by Republicans calls for lowering the tax rate for corporations from 35% to 20%, among other changes.A framework released by Republicans calls for lowering the tax rate for corporations from 35% to 20%, among other changes.
The president said the revamp will make the US more competitive and help middle class families.The president said the revamp will make the US more competitive and help middle class families.
Democrats criticised the plan as a give-away for the wealthy.Democrats criticised the plan as a give-away for the wealthy.
The Republican blueprint does not detail what tax benefits might be eliminated to offset the cost of the cuts - negotiations that are likely to be difficult. The Republican blueprint does not detail what tax benefits might be eliminated to offset the cost of the cuts for businesses - negotiations that will be difficult.
The Chamber of Commerce, an influential business group that has pushed for reform, said it would remain engaged during the "hard decisions" ahead. Republican leaders presented a united front on Wednesday, pledging to make changes this year while they control both the White House and Congress.
The party is looking for a win, after repeatedly failing to reform the US healthcare system.
"This is the right tax cut, and this is the right time," President Trump said at a speech to rally support for the effort.
What cuts are in the Republican tax plan?What cuts are in the Republican tax plan?
For businesses:For businesses:
For families:For families:
'A relic' 'Talking the talk'
President Trump said he wanted to simplify the system, lower the burden on middle class families and make the US more competitive. Democrats said the proposal will hurt middle class families, particularly lower-income, single parents with children.
"Our country and our economy cannot take off like they should unless we dramatically reform America's outdated, complex and extremely burdensome tax code," he said. The plan would slim the number of tax brackets to three - with people charged at a 12%, 25% or 35% rate.
Among the changes, Republicans would slim the number of tax brackets to three - with people charged at a 12%, 25% or 35% rate.
What incomes would qualify for each rate is still unknown.
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%.
Democrats said the changes will hurt middle class families, particularly lower income, single parents with children. What incomes would qualify for each rate is still unknown.
"He's talking the talk but he's not walking the walk," said Senator Chuck Schumer of New York, a top Democrat. White House officials said the proposal leaves open the possibility of a higher top rate.
Mr Schumer also said the cuts would increase the deficit, putting entitlement programmes such as Medicare and Social Security at risk. They also said bigger deductions would make up for the higher bottom rate, and the elimination of other personal exemptions.
Senator Chuck Schumer of New York, a top Democrat, dismissed that claim as 'bunk'.
Deficit-financed cutDeficit-financed cut
He also said the cuts would increase the deficit, putting entitlement programmes such as Medicare and Social Security at risk.
The Committee for a Responsible Federal Budget, a nonpartisan think tank, said a rough analysis suggests the proposal would lead to $2.2tn in net cuts over about a decade.The Committee for a Responsible Federal Budget, a nonpartisan think tank, said a rough analysis suggests the proposal would lead to $2.2tn in net cuts over about a decade.
The Trump administration maintains that closing loopholes will help offset revenue loss, but the plan does not specify what benefits will be eliminated. The Trump administration maintains that closing loopholes will help offset revenue loss. Among the benefits that would be eliminated are deductions for state and local taxes.
Lawmakers plan to preserve tax incentives for homeownership, retirement, education, as well as research and development.Lawmakers plan to preserve tax incentives for homeownership, retirement, education, as well as research and development.
White House officials said they intend to erase deductions for state and local taxes, among others.
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
President Trump said the lower tax rate for business will spur growth, helping to cover the cost.President Trump said the lower tax rate for business will spur growth, helping to cover the cost.
But economists maintain that growth will not be enough to close the gap. They expect the plan to add to the US debt, which has already passed $20tn. Economists maintain that growth will not be enough to close the gap. They expect the plan to add to the US debt, which has already passed $20tn.
"It is clear that much more work needs to be done to ensure tax reform is fiscally responsible," the Committee for a Responsible Federal Budget said. "Given today's record-high levels of national debt, the country cannot afford a deficit-financed tax cut.""It is clear that much more work needs to be done to ensure tax reform is fiscally responsible," the Committee for a Responsible Federal Budget said. "Given today's record-high levels of national debt, the country cannot afford a deficit-financed tax cut."
Building momentum Analysis by US business correspondent Michelle Fleury
Republicans are looking for a policy win, after failing to reform US healthcare. In Indiana, Donald Trump promised "revolutionary change" to America's tax code.
The Trump administration had earlier pledged to achieve tax reform before the end of August. The last time it was overhauled was when Top Gun was released in cinemas and the Oprah Winfrey Show made its TV debut. Ronald Reagan was president and the year was 1986.
But it has been tough to reach agreement on even the broad goals released on Wednesday, many of which are familiar from earlier proposals. Today, few would argue against simplifying the nation's tax system. But does this plan achieve that reform?
Republican leaders presented a united front on Wednesday, pledging to make changes this year while they control both the White House and Congress. The blueprint released by the White House and Republican congressional leaders offers plenty of ideas for cutting taxes - for individuals and for corporations.
However, it leaves many questions unanswered.
It does not specify which tax breaks should be removed to make up for the trillions of dollars in lost revenue.
Calling the current plan "tax reform" may be pushing it too far.
Cutting taxes is easy. Identifying ways to pay for it is the real challenge.