President Donald Trump has announced tax cuts for both businesses and individuals, saying the move primarily targets the middle class. Under the new plan, child tax credits will expand, estate tax will be repealed and married couples will have their standard deductions doubled.

Benefits for the working class

Trump was optimistic as he predicted a drastic rise in the number of US jobs during a speech in Indianapolis on Wednesday. The Commander in Chief noted that companies would soon start competing for American labor and wages would inevitably, increase.

The tax overhaul will lower corporate tax from 35 to 20 percent. The individual tax rate will also drop to 35 percent from 39.6 percent. Personal, tax-free income, will increase. Deductions for mortgage interest and charitable giving would also remain.

A surcharge was recommended for the wealthy, but the income levels at which the rates would apply, have not been set. That has triggered uncertainty as to how much an average family would benefit. Describing the current tax system as a “relic” that’s acting as “a barrier to economic growth,” Trump said if America hoped to compete with other countries, its tax code needed to be simplified. He revealed that his plan is rooted in four principles including “making the tax code fair” and “bringing back trillions of dollars in wealth parked overseas."

No cutbacks for the rich

Officials insisted that the wealthy won’t benefit from the new plan.

Trump’s top economic adviser Gary Cohn, told ABC News that “while Americans are getting a great deal, rich people won’t get a tax cut.” At the same time, however, officials noted that the higher earners could, in fact, benefit, since the House and Senate committees are crafting legislation could add a certain tax bracket if they choose to.

This would be above the stated 35 percent rate. Cohn reiterated that while the proposal aims to help the middle class, some families may end up paying higher taxes, depending on their logistics. He said, “there's an exception to every rule and you can always find a unique family somewhere."

Republicans hope for a win

The new revamp of the tax code is the first in three decades and one of Trump’s campaign promises.

His Republican party hopes to secure its majority in 2018’s midterm elections and this tax proposal is being viewed by his supporters, as a good step in the right direction. After the collapse of health care repeal, this move is critical. The US currently has a $20 trillion national debt and both Democrats and Republicans are wondering how this $6 trillion tax cut is going to help.

Senate Minority Leader Chuck Schumer was pessimistic on Wednesday 27, stating that each of Trump’s proposals would result in a huge windfall for the richest Americans and not the taxpayers who need the most help.
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