The Republicans have been fighting for a long time to reduce taxes in the United States, and U.S. President Donald Trump wants to make it real. There will be great changes, and one of them reduces the tax for the corporations from 35 percent to 20 percent. According to a report by the BBC, Trump stated that it will help the American middle class and make the United States more competitive. The plan gives no information about tax benefits that will be eliminated to offset the tax reductions. The Democrats criticized the tax reform and stated that it benefits the rich Americans and will hurt middle-class families.
The Chamber of Commerce has been pushing for the reforms and stated that there will be challenges ahead.
More details
Some tax reductions will be big, for business the reduction of the corporate rate will be from 35 percent to 20 percent. There are also plans to reduce the tax on overseas profits and also a top 25 percent rate for companies organized as pass-through entities. The families will also get benefits, the reform will almost double the sum of money that individuals and families can deduct to $12,000 and $24,000. The plan will eliminate taxes on inheritances, increase tax credits for children and more.
Outdated tax system
According to a report by BBC, Trump stated that the U.S. tax system is outdated, burdensome and complex, so, the American economy can't develop all its potential.
The Republicans want to reduce the number of tax brackets to three, but they have been criticized by the Democrats who state that the changes favor the wealthy but will hurt the middle class, mainly single parents. The Democrat Senator Chuck Schumer stated that the tax reductions would put at risk important programs like Medicare and Social Security.
Are the cuts too big?
According to a report by the BBC, the changes will produce about $2.2 trillion in cuts over the next decade, but the Trump government states that closing loopholes will help offset the revenue loss. There are plans to maintain tax incentives for education, homeownership, retirement, and other areas. White House officials said they want to eliminate deductions for state and local taxes to cover the reductions.
Trump believes that the Tax Cuts will increase the U.S. economic growth, so, the costs will be covered this way, but some economists believe the growth won't be enough to cover the gap. They believe that the plan will increase the U.S. debt, which is already more than $20 trillion.
