The Trump administration is yanking the curtain off its tax proposal Wednesday.
President Donald Trump and GOP leaders are announcing a jointly-agreed framework for tax reform that slashes rates for the middle class.
Trump has said it will be the ‘largest tax cut’ in American history. He’ll promote the plan today in Indianapolis, Indiana.
WHAT TAX REFORM WILL MEAN FOR YOU
- The lowest income bracket of 10 percent will be eliminated and replaced with a 12 percent rate
- Standard deduction will also be doubled
- The first $12,000 of income will not be taxed when filers choose not to itemize
- The proposed standard deduction for joint filers is $24,000 annually
- Three tax brackets will take the place of the current seven: 12 percent, 25 percent and 35 percent
- No announcement yet on what incomes the three new brackets all be at
Vice President Mike Pence governed Indiana until earlier this year, when he stepped into the role of VP. The Midwestern state is also home to Democratic Sen. Joe Donnelly, who’s catching a ride with Trump today on Air Force One.
With the goal of simplifying the tax code, the plan axes four of the existing tax brackets and leaves three rates of 12 percent, 25 percent and 35 percent. Corporations will see their rates drop to 20 percent.
It is unclear what income levels will qualify for each bracket, although Republicans are also proposing to double the standard deduction on taxable income.
The first $12,000 of income will not be taxed when filers choose not to itemize. The proposed standard deduction for joint filers is $24,000 annually.
Republicans are also proposing to increase the child tax credit to an unspecified amount.
‘The vision is to make it simpler,’ White House Counselor Kellyanne Conway said Wednesday morning on Fox and Friends.
‘The code currently favors the wealthy and privileged and the connected who can hire attorneys and accountants that can help them navigate and take advantage of these deductions and credits, many of which go away in the Donald Trump legislative plan for tax overhaul.’
The Trump administration is yanking the curtain off its tax proposal Wednesday
Today’s announcement, which Trump will pump during an event this afternoon at the Indiana State Fairgrounds, advances the blueprint the Republican administration put out earlier this year.
It’s the product of careful negotiation between the president’s chief economic adviser, Gary Cohn, his Treasury secretary, Steve Mnuchin, the House speaker, Paul Ryan, Senate majority leader Mitch McConnell, and the heads of the tax-writing committees of Capitol Hill.
President Trump had vigorously campaigned for a steeper reduction in taxes for corporations and a 10 percent floor for the income tax.
He’ll have to accept the higher rates that congressional Republicans are offering him in order to have a chance at passing reform.
A White House official stressed on Wednesday morning that Trump would prefer a 15 percent corporate tax rate, even though reporting indicates that’s not what he agreed to.
Trump has repeatedly stressed his desire for the dramatically lower rate that he says will make American businesses more competitive.
Republican lawmakers involved in the tax-writing process have long said that a rate of 20 percent is more attainable. They’ll go to work now turning the proposal into a bill that can be attached onto next year’s budget once that document has passed.
Administration officials have said they want to pass a budget in October and have tax reform through by the end of the year.
Ryan has committed to having a new tax code by New Year’s Day.