White House: Trump’s $200 billion tax cut is not the biggest mistake
Trump’s tax cut on Monday was the biggest one of his presidency, but he’s not the only one who made mistakes.
Here are four more.
The president’s tax cuts for the wealthy were not fully offset by cuts for everyone else.
The White House had promised to reduce the corporate tax rate from 35 percent to 15 percent, but instead it raised the top rate from 39.6 percent to 39.8 percent.
The $1 trillion tax cut that the White House presented on Monday included $1.3 trillion in tax cuts to corporations and $1 billion in tax breaks for individuals.
These were not offset by tax cuts that the wealthy received, according to a Treasury Department analysis released Monday.
The nonpartisan Tax Policy Center estimated that Trump’s top marginal rate would be $4,955 per year under his plan, up from $3,600 under his current plan.
“This is not going to be the largest tax cut in the history of the United States,” said Michael T. Klare, a law professor at the University of Southern California and a former Treasury official.
“It’s not even close.”
Klare noted that Trump had proposed to cut the top corporate tax rates to 15% from the current 35 percent.
“They’re really going to give a lot of relief to the top 0.1 percent,” Klare said.
The Tax Policy Council, a nonpartisan think tank, estimated that the Trump plan would add $4 trillion to the national debt over the next decade.
The Trump administration released its proposed budget for 2019 and 2020 that included $4.2 trillion in new revenue from the plan.
The Treasury Department has projected that the proposed tax cuts will add $3.5 trillion to debt over that time frame.
The tax cuts would not have been fully offset if the United Kingdom had passed its own version of the bill.
The United Kingdom voted on Tuesday to exit the European Union, triggering a Brexit vote in Britain and leaving the European Commission with a major power struggle.
The British Parliament approved its version of its own tax plan earlier this month, but the House of Commons passed a version of it that also included $350 billion in new tax cuts, with some of those reductions offset by higher corporate taxes.
The bill that the House passed also includes $1,000 in corporate tax cuts.
A Treasury Department official said that the British parliament did not intend to repeal the European Court of Justice’s ruling that made Britain a party to the single market and to accept the terms of the European Economic Area agreement.
“The UK voted to leave the EU and the UK will continue to be bound by its terms,” said an official.
But the Treasury Department also said that, as a result of Brexit, the United Nations General Assembly will vote in a “special session” on July 29 to declare the United State to be “not a party” to the EEA agreement.
Trump has already cut the corporate rate to a 17.5 percent rate from 20 percent under the plan he unveiled on Monday.
But under his proposed tax plan, the top marginal tax rate would increase from 39 percent to 38 percent.
Trump’s plan would not fully reduce the federal deficit.
A new report from the nonpartisan Tax Foundation found that under Trump’s proposed tax code, the deficit would rise from $1tn to $1trillion over 10 years.