• 57°

Trump plan would cut taxes for companies; White House claims plan to help the middle class

WASHINGTON — President Donald Trump proposed dramatic cuts in corporate and personal taxes Wednesday in an overhaul his administration asserts will spur national economic growth and bring jobs and prosperity to America’s middle class. But his ambitious plan is alarming lawmakers who worry it will balloon federal deficits.

The plan would reduce investment and estate taxes, helping the wealthy. But administration officials said several other tax breaks that help well-to-do taxpayers would be eliminated and the plan would largely help the middle class.

The White House has yet to spell out how much of a hole the tax cuts could create in the federal budget, maintaining that the resulting economic growth would eliminate the risk of a soaring government deficit— if not actually cause the red ink to diminish.

The outlined changes to the tax code are the most concrete guidance so far on Trump’s vision for spurring job growth and fulfilling his promise to help workers who have been left behind by an increasingly globalized economy.

“He understands that there are a lot people who work hard and feel like they’re not getting ahead,” said Gary Cohn, director of the White House National Economic Council.  “I would never, ever bet against this president. He will get this done for the American people.”

Still, the proposal leaves a series of open questions that could affect its impact on taxpayers and the economy.

The administration wants to reduce the number of tax brackets to three from seven, but it has yet to determine the income levels for people who would be put in each bracket. It also has yet to spell out how the plan would stop wealthier Americans from exploiting a lower corporate tax rate to reduce how much they pay. And the White House has downplayed the threat that the tax cuts could cause the deficit to surge, possibly eroding support for the plan among lawmakers in Trump’s own Republican Party.

Cohn said Trump and his administration recognize they have to be “good stewards” of the federal budget. But the plan as it currently stands could cause the federal deficit to climb, unless it sparks a massive and lasting wave of growth that most economists say is unlikely.

Administration officials intend to hash out additional details with members of the House and Senate in the coming weeks for what would be the first massive rewrite of the U.S. tax code since 1986.