Washington (AFP) – Donald Trump’s Republican Party on Wednesday rolled out a plan to reform America’s tax code, calling for deep cuts to corporate rates and the abolition of inheritance tax in a high stakes bid to salvage the president’s agenda.
“This is our best opportunity in a generation to deliver real middle-class tax relief, create jobs here at home, and fuel unprecedented economic growth,” House Speaker Paul Ryan said in a statement unveiling the plan.
“It has been 31 years since we last got this done, and hardworking families and small businesses cannot afford to wait any longer.”
Developed in tandem with Trump’s White House, the Republican plan calls for slashing the US corporate tax rate from 35 to 20 percent — to below the 22.5 average of the industrialized world, it says.
For households, the number of tax brackets would be reduced from seven to three, with a maximum rate of 35 percent, against 39.6 at present, although the plan also mentions the “potential” for an additional top rate for the highest-income taxpayers.
Overhauling the tax system has long been a political Holy Grail for the Republican Party.
It was also a major Trump campaign pledge, which has taken on extra importance after his efforts to enact promised healthcare reform and build a border wall stalled.
Trump himself will be promoting the Republican plan during a speech in Indiana later on Wednesday.
The president and his party want to simplify the thousands-of-pages-long US tax code — to enable Americans to fill out their return on a postcard, runs the refrain.
That involves the elimination of countless loopholes and deductions.
Under the Republican plan, only two highly popular deductions are explicitly protected: for interest paid on home mortgages and for charitable contributions. Lawmakers will hammer out precisely which deductions will survive under the reform in the coming months.
Inheritance tax would be scrapped altogether — a longstanding demand of Republicans who refer to it as the “Death Tax.”
The tax framework also seeks to encourage firms to bring back profits that have accumulated abroad by offering a one-time, low tax rate on wealth brought back from overseas.