(CNSNews.com) - The White House on Wednesday unveiled President Donald Trump’s tax cut plan, which includes repeal of the death tax and the alternative minimum tax and the reduction of the seven tax brackets down to only three.
“The president is going to seize this opportunity by leading the most significant tax reform legislation since 1986 and one of the biggest tax cuts in the American history,” National Economic Director Gary Cohn said at the White House.
“The president has focused on three things since his campaign: job creation, economic growth and helping the low and middle-income families who have been left behind by this economy,” Cohn said.
“Families in this country will also benefit from tax relief to help them with child and dependent care expenses. We are going to repeal the alternative minimum tax. The AMT creates significant complications and burdens, which require taxpayers to do their taxes twice to see which is higher. That makes no sense, and we should have one simple tax code,” Cohn said.
“We’re going to repeal the death tax. The threat of being hit by the death tax leaves small business owners and farmers in this country to raise countless hours and resources on complicated estate planning to make sure their children aren’t hit with a huge tax when they die. No one wants to see their children have to sell the family business to pay an unfair tax,” he said.
The president’s plan is also aimed at lowering the business tax rate from one of the highest in the world to one of the lowest. The U.S. corporate tax rate dates back to 1988 when President Ronald Reagan left office.
“That’s why we are now one of the least competitive countries in the developed world when it comes to corporate tax,” Cohn said.
Treasury Secretary Steve Mnuchin said the plan will consist of “massive tax cuts for businesses and massive tax reform and simplification.”
“Our objective is to make U.S. businesses the most competitive in the world. Right now, we have a 35 percent corporate rate on worldwide income and deferral. It is perhaps the most complicated and uncompetitive business rate in the world - not a surprise that companies leave trillions of dollars offshore,” he said.
“As the president said during the campaign, we will lower the business rate to 15 percent. We will make it a territorial system. We will have a one-time tax on overseas profits, which will bring back trillions of dollars that are off-shore to be invested here in the United States to purchase capital and to create jobs,” Mnuchin added.
Mnuchin said the president wants to “unleash economic growth for businesses,” and that’s not just for large corporations.
“Small- and medium-size businesses will be eligible for this business rate as well,” he said.
“The president’s objective is creating economic growth, and as we’ve said before, we believe we can go back to three percent or higher GDP that is sustainable in this country. The overall economic plan consists of massive tax cuts and tax reform, regulatory relief and renegotiating trade deals,” Mnuchin said.
To provide some historical context, Cohn explained, “In 1935, we had a one-page tax form consisting of 34 lines with two pages of instructions. Today, the basic 1040 form has 79 lines and 211 pages of instructions. Instead of a single form, the IRS now has 199 tax forms on the individual side of our tax code.”
“We are going to cut taxes and simplify the tax code by taking the current seven tax brackets we have today and reducing them to only three brackets: a 10 percent bracket, a 25 percent bracket and a 35 percent bracket,” Cohn said.
The plan also doubles the standard deduction, which means that “a married couple won’t pay any taxes on the first $24,000 of income they earn, so in essence, we are creating a 0 tax rate .. for the first $24,000 that a couple earns,” he said.
“The larger standard deduction also leads to simplification, because far fewer couples will need to itemize, which means their tax form can go back ... to that one simple page that I talked about earlier,” Cohn added.
“We’re going to eliminate most of the tax breaks that are mainly benefits to high-income individuals. Home ownership, charitable giving, and retirement savings will be protected, but other tax benefits will be eliminated,” Cohn said.
“As we all know, job creation and economic growth is the top priority of the administration. Nothing drives economic growth like capital investment. Therefore, we are going to return the top capital gains tax rate and dividend rate to 20 percent, repealing the harmful 3.8 percent Obamacare tax on dividends and capital gains. That tax has been a direct hit on investment income and small business owners,” he said.