President Donald Trump’s memorandum listing the administration’s goals for reforming the federal tax code shows the president’s plan would decrease the tax burden faced by individuals and businesses.
At an April 26 press conference, U.S. Treasury Secretary Steven Mnuchin and White House economic adviser Gary Cohn described Trump’s blueprint for federal tax reform, releasing a one-page memorandum containing 11 proposals. The reforms include reducing the number of individual tax brackets from seven to three and ending U.S. taxes on profits earned overseas by American businesses taxed by the countries in which they earned the profits.
Bringing Prosperity Back
Peter Ferrara, a senior fellow for entitlement and budget policy at The Heartland Institute, which publishes Budget & Tax News, says the Trump tax reforms would bring significant, long-term economic growth back to the United States.
“The proposal would restore booming economic growth, create new jobs, and raise wages for working people,” Ferrara said. “Just like the tax rate cuts did for Reagan and for Kennedy, this proposed reform would bring on a long-overdue, booming economic recovery and spread prosperity to parts of the economy that have been stagnant for years.”
‘Heading in the Right Direction’
Adam Michel, a policy analyst with The Heritage Foundation, says the blueprint is a good start, but lawmakers must take care to get the details right.
“The proposal is heading in the right direction, but the details will be important,” Michel said. “I’d like to see expensing [of business asset purchases] included as the proposal evolves. It currently is not included. Full expensing would simplify the currently complex and economically harmful system of depreciation and would encourage additional investment, job creation, and economic growth by treating all business costs equally.”
Taking Care of Business
Michel says lowering business taxes to make them competitive with other nations’ is an important part of Trump’s tax blueprint.
“Lowering the business income tax rate to 15 percent has rightly received the most attention,” Michel said. “Because businesses are made up of people, it is those Americans who work for and invest in American companies who actually pay the tax.”