President Donald Trump on Wednesday proposed the biggest U.S. tax overhaul in three decades, offering to cut taxes for most Americans but prompting criticism that the plan favors the rich and companies and could add trillions of dollars to the deficit.
The proposal, which the Republican president said was aimed at helping working people, creating jobs and making the tax code more simple and fair, faces an uphill battle in Congress with Trump’s own party divided and Democrats hostile.
The plan would lower corporate income tax rates, cut taxes for small businesses, reduce the top income tax rate for individuals and scrap some widely used tax breaks including one that benefits people in high-tax states dominated by Democrats.
Forged during months of talks among Trump’s aides and top Republicans in Congress, the plan contained scant details about how to pay for the cuts without fueling deficits. It must be turned into detailed legislation by the Republican-led congressional tax-writing committees.
Speaking at an event in Indianapolis, Trump called the plan the largest tax cut in U.S. history and “historic tax relief to the American people.”
“This is a once-in-a-generation opportunity,” Trump said. “We want tax reform that is pro-growth, pro-jobs, pro-worker, pro-family and yes tax reform that is pro-American.”
Trump, a real estate mogul-turned-politician who promised big tax cuts as a candidate last year, said earlier on Wednesday when asked by reporters that he personally would not stand to gain financially from the proposal.
“I think there’s very little benefit for people of wealth,” said Trump, who has refused to make public his own tax returns unlike many of his White House predecessors.
Republicans have produced no major legislative successes since Trump took office in January even though they control the White House and both chambers of Congress.
The Republicans’ top legislative priority, an overhaul of the U.S. healthcare system, collapsed in the Senate on Tuesday, while another key item on Trump’s wish list, infrastructure spending, has yet to materialize.
A comprehensive rewrite of the U.S. tax code has eluded lawmakers for decades. The last one was passed in 1986.
The White House said that under the proposal typical middle-class families would have less of their income subject to federal income tax. Trump noted that the first $12,000 earned by an individual and the first $24,000 by a married couple would be tax-free.
The plan would lower the top individual rate from to 35 percent from 39.6 percent.
It foresees a 20 percent corporate income tax rate, down from the current 35 percent but not as low as Trump’s initial demand for 15 percent.