INDIANAPOLIS — President Trump unveiled a sweeping tax reform plan Wednesday that dramatically lowers rates, expands the amount of tax-free income everyone can pocket and simplifies the code to a one-page return for most Americans.

In a speech in Indianapolis, Indiana, Mr. Trump called the proposal “revolutionary change” for businesses and for individual taxpayers.

“We will dramatically cut the business tax rate so that American companies and American workers can beat our foreign competitors and start winning again,” Mr. Trump said. “The biggest winners will be middle-class workers as jobs start pouring into our country, as companies start competing for American labor, and as wages continue to grow.”

The president also said tax reform hasn’t been a partisan issue in Washington in the past, and it shouldn’t be divisive this time, either.

“There is no reason that Democrats and Republicans in Congress should not come together to deliver this giant win for the American people and begin the ‘middle-class miracle’ once again,” the president said.

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Mr. Trump said it’s not a plan for “the wealthy and the well-connected.”

“They can call me all they want and it’s not going to help,” he said. “And it’s not good for me, believe me.”

Mr. Trump also pointed in the audience to Democratic Sen. Joe Donnelly of Indiana, who accompanied the president from Washington on Air Force One, and gave him a friendly warning.

“If Sen. Donnelly doesn’t approve it — you know he’s on the other side — we will come here and campaign against him,” Mr. Trump said to cheers. “I think he’ll approve it. It’s the right thing to do.”

The ambitious plan has something for everybody but also plenty that the president’s critics are attacking.

He proposed to reduce the number of tax brackets, expand tax credits for middle-class families such as the child tax credit, eliminate most deductions that benefit the wealthy and repeal the Alternative Minimum Tax and the estate tax or “death tax,” said White House officials.

“We must make our tax code simple and fair. It’s too complicated,” Mr. Trump said Tuesday. “So we’re going to make it very, very simple. It’s called simplification.”

Administration officials and Capitol Hill GOP leaders have been working the plan for months. The framework will be rolled out simultaneously Wednesday by the president and the House and Senate tax committees, with many details to be finalized during the legislative process.

On the business side of the plan, the corporate tax rate is cut from 35 percent to 20 percent and the top rate for small business is cut to 25 percent. It also moves toward a system that doesn’t tax profits that U.S. companies earn overseas, creating an incentive to bring the money home and potentially invest in job-creating expansion.

“We will reduce the corporate tax rate to … below the average of other industrialized nations,” Mr. Trump told the crowd. “This will be the lowest top marginal income tax rate for small and mid-size businesses in more than 80 years.”

Mr. Trump said the changes will spark an economic boom.

“The jobs will start pouring in from all over the world coming back to our country,” he said. “We have a noncompetitive tax structure right now, and we’re going to go super-competitive.”

The simpler tax code would condense the current seven income tax brackets into three. The top tax rate would come down form the 39.6 percent to 35 percent, said White House officials who previewed the plan for reporters.

The other two rates would be 25 percent and 12 percent.

However, the lowest rate under the plan is higher than the current 10 percent rate. The apparent hike for those at the bottom is bound to draw hoots from Democrats and liberal activists, although other tax breaks are intended to make up the difference.

“That is more than offset by the fact that we are increasing the amount of money taxed at zero percent,” said a senior White House official. “We believe that the vast majority of people in who are in the 10-percent bracket today will be better off under our framework than under current law.”

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Under the plan, the individual tax rates will have a larger zero percent tax bracket. The standard deduction that most taxpayers use would nearly double to $12,000 for individuals and $24,000 for married couples filing jointly.

The change would make tax free the first $12,000 earned by individuals and $24,000 earned by married filers. That’s more money that the top income of current 10 percent bracket.

The framework presented by the president will leave out significant details, including the income levels for each bracket, for House and Senate committees to set.

The amount the tax cuts add to deficits will be determined by committees through the budget process, said an officials, who insisted the economy growth will wipe out projected shortfalls.

“This will be a deficit neutral bill when economic growth is taken into account,” said the official.

Rep. Kevin Brady, chairman of the tax-writing House Ways and Means Committee, said deficits would be a temporary side effect.

“We’re proposing to balance the budget over time with a combination of accurately-measured economic growth, as well as eliminating the loopholes, exemptions, and deductions that have made this tax code a monstrous tax code,” he said.

The committees also would determine how much to expand the child tax credit. But officials said the president wants to raise the income level that qualify for the credit and push “substantially higher” the credits current limit of $1,000.

Mr. Trump also wants to create a $500 tax credit for non-child dependents, such as for families caring for an elderly relative.

The simplification plan keeps Mr. Trump’s promise that reforms will not benefit the rich by eliminating most itemized deductions and “loopholes” currently used by the wealthy, said officials. The lost deductions coupled with the lower rate is intended to keep the effective tax rate the same, if not higher.

The framework also gives Congress leeway to add a fourth rate for the wealthiest individuals. The officials stressed that the administration wants the new system to be at least as progressive as the current system and does not want to shift the tax burden from higher-income to lower-income households.

Other bonuses for businesses include allow an immediate 100 percent expensing write-off for equipment and building purchases for at least the first five years.

Mr. Trump also wants to keep tax credits for low-income housing and for research and development that are popular with businesses.

The plan likely will come under attack for eliminating the tax on overseas profits and repealing the death tax, moves that Democrat argue mostly benefit corporations and the wealthiest families.

Mr. Trump will argue that the worldwide tax system encourages companies to keep money stashed in offshore tax havens.

He will point to family farms as an example of how the death tax hurts hardworking Americans, said a White House officials.

“The goal of all of this is to give workers the level playing field they deserve,” said the official.

Senate Minority Leader Charles E. Schumer, New York Democrat, recently called the elimination of the death tax “one of the most egregious things they are doing.”

Another potential lightening rod is the elimination of the Alternative Minimum Tax or AMT, a parallel tax system that Congress created in 1969 to stop 155 very wealthy individuals from using loopholes to avoid paying taxes.

Because the AMT wasn’t automatically updated for inflection, over time the system snared more and more Americans. Congress had to pass an annual “patch” to spare middle-class taxpayers and permanent fixed it in 2013 with an exemption indexed to inflation. However, the system remains complicated and forces taxpayers to jump through hoops to determine whether to use it.

The elimination of the AMT is part of Mr. Trump’s simplification plan.

• Dave Boyer and David Sherfinski contributed to this story.

© Copyright (c) 2017 News World Communications, Inc.


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