Published: Thu, April 27, 2017
Business | By Max Garcia

BUSINESS REPORT: Could the Trump corporate tax cut be bad for Canada?

BUSINESS REPORT: Could the Trump corporate tax cut be bad for Canada?

"While I'm ready to work across the aisle to reform our tax code for the families I serve, I can not support a plan that explodes the national deficit and gives windfall tax cuts to Wall Street and the ultra-wealthy". "We're about solutions. They aren't to that point yet, either on the policy or on the personnel level, and it's both obvious and disruptive to the process".

The Trump administration has been looking for ways to cover the cost of its "massive" proposed tax cut. Initially created to prevent taxpayers with a large amount of disposable income from using loopholes to evade taxes, repealing it will no doubt cater to the economically elite.

That's because he wants to slash or eliminate numerous taxes that disproportionately hit the wealthy.

"We've been briefed on what they are going to do, and it is basically along exactly the same lines we want to go", Ryan said.

While supporters talk of the economic growth to be generated by cutting taxes, others question how much growth is realistic.

Here's what we know so far about the president's tax proposal.

The dollar index against a basket of major currencies was little changed at 98.931 after rising to 99.332 overnight. The 3.8-percent tax on investment income imposed by former President Obama's Affordable Care Act would be eliminated as well. Trump's administration agrees that it won't be easy.

The president's presentation Wednesday will be "pretty broad in the principles", said Marc Short, Trump's director of legislative affairs. In a news conference with reporters, Mnuchin declined to answer how the cuts could benefit the president or his businesses, saying, "What this is about is creating jobs and creating economic growth".

Treasury Secretary Steve Mnuchin argued that economic growth will pay for most of the massive tax cuts.

"It's about the economy", Cohn said.

The standard deduction would double. The top brackets begin at $470,700 for married couples filing jointly and $418,400 for singles. While the highest American corporate tax rate is 35 percent, the average effective corporate rate in the U.S.is 29 percent, the third highest in the G-20, said Goldwein.

He said he anticipates the proposal would return the U.S.to greater than 3 percent growth without an adverse impact on the debt or revenue. It just takes a good tax lawyer.

Trump proposes to end most tax deductions, while preserving those for mortgage interest and charitable giving. "You're basically going to undermine the state's tax base". The estate tax and alternative minimum tax would be withdrawn, however, the newspaper reported. So retirement savers would still be able to reduce their taxable income by contributing to a 401 (k). If Trump's plan were implemented, "it could exacerbate inequality", said Steven Rosenthal, a senior fellow at the Tax Policy Center.

The tax plan's impact on the deficit and debt will be key to winning backing on Capitol Hill. The actual tax rate on this foreign capital has yet to be determined. And the new plan would consolidate the seven tax brackets for individuals and reduce them to only three brackets: a 10-percent bracket, a 25-percent bracket and a 35-percent bracket.

Right now, there are doubts.

Which ones? "We have to have that discussion", Collins said. Our current outdated tax code puts USA businesses at a disadvantage in the global economy. "Reducing taxes on all businesses down to 15 percent will turbocharge the economy". That's because Trump would apply the corporate rate to "pass through" businesses. That would mean US companies would only owe USA tax on what they earn in the United States.

One-time tax on overseas profits: The president will call for a low, one-time tax on the $2.6 trillion of profits that were earned overseas by USA multinational corporations and were technically never brought back to the United States.

The plan is not expected by analysts to include any proposals for raising new revenue, potentially adding billions of dollars to the federal deficit.

Other economists say that if the cuts balloon the deficit, the resulting jump in government borrowing would swell interest rates and make it harder for businesses and households to borrow and spend. "Some charities might see a drop in donations, because it won't matter for people's taxes", Nellen said.

Grant Thornton's Stamper noted hurdles, too. He's a Republican president, and there's a Republican-controlled Congress.

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