Economy

Trump Vows Radical Change In Tax Overhaul

The administration also wants to compress seven tax brackets into three, while lowering the top rate to 35% and increasing the lowest to 12% from 10%. The administration wants to cut the corporate tax rate to 20% from its current 35%, although that change isn't as dramatic as it might seem because due to loopholes and other maneuvers, big USA corporations now pay an effective tax rate of only 18.6%, according to the Congressional Budget Office.

Numerous details still need to be hashed out by members of Congress, who are hoping to introduce corresponding legislation later this year.

"We applaud Washington's focus on reducing business and personal income tax burdens, but can not support a proposal that unfairly burdens New Yorkers", said Heather Briccetti, president and CEO of the Business Council of New York State.

In 2015, Internal Revenue Service data show, an average US taxpayer claimed about $3,598 for the so-called SALT deduction. That's more than any other state, according to the Tax Foundation, a right-of-center tax policy research organization. The plan would keep tax incentives for mortgage interest and charitable contributions in place and would eliminate the death tax. But Congressman Kevin Brady, the chairman of the tax writing House Ways and Means Committee, confirmed that the plan is to eliminate the state and local deduction, among others. When it came to the corporate rate, he said that has proven to be unpopular, and predicted that Republicans would run into the same problems in pursuing this tax reform plan that they did with their attempts to repeal and replace Obamacare.

That's because Trump's economic advisers have targeted the federal tax deduction individuals can claim for their state and local taxes.

The US equity markets reacted positively to a more detailed framework of the Trump administration's tax reform plan, "most notably Tech stocks expected to benefit from a repatriation tax holiday" noted Mike van Dulken. Several other California Republicans who The Bee reached out to declined to comment or did not respond. The National Conference of State Legislatures says "tens of millions of middle-class taxpayers of every political affiliation" would pay more taxes if the state and local deductions are eliminated.

Brady said Wednesday afternoon he hoped to win over colleagues and who are anxious about the financial impact on their constituents.

The GOP proposal also includes one feature aimed at bolstering the middle class: Doubling the standard deduction to $12,000 for individuals and $24,000 for married couples. But until Republicans offer more details, including who falls in which tax bracket, it's hard to evaluate how it will ultimately balance out for California taxpayers.

The plan to slash taxes could also drive up the country's debt and result in massive cuts to social services, Stringer warned.

Kaeding says that's generally true.

"Until New York completely overhauls its tax code, removing this provision will strip primarily middle- and low-income New Yorkers of their only real tax relief", said Rep. Claudia Tenney (R-Oneida County).

Conservatives favor abolishing the deduction, saying it would rein in tax-and-spend behavior by state and local governments. State and local taxes have been deductible since 1913.

"That's going to be the position from which we negotiate", Thompson said. The framework, along with tax principles Democrats have laid out this year, are just the starting point.



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