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Published: Wed, April 26, 2017
Economy | By Melissa Porter

The Tax Cut Elizabeth Warren Should Love

The Tax Cut Elizabeth Warren Should Love

President Donald Trump is reportedly planning to propose a 15% corporate tax rate - which could cost the government $2 trillion, according to one estimate.

The current rate is 35% - the United States president has argued that it is hurting USA businesses and offering an incentive to companies to move their operations to countries where taxes are lower (like Ireland). He is not likely to endorse a border-adjusted tax in Wednesday's plan, a senior administration official said last week.

"We were at 15 percent from Day 1", Kudlow said, lamenting that Trump's new economic advisers had discussed scrapping the campaign tax plan.

But here's the thing: Trump, who used the word "massive" 12 times in that AP interview, forgot to mention a huuuuge caveat about tax reform efforts: They are devilishly hard to pull off.

Simply by releasing a plan Trump is demonstrating that he is "interested, engaged" and even if it does not match the House plan, it will spark further discussions, the lobbyist said.

In practice, however, Democrats pushed back on Trump's infrastructure plan from the campaign, which would include $1 trillion in infrastructure spending in a joint private-public effort. Ron Wyden of OR, the top Democrat on the Senate Finance Committee.

Stocks have been rising early this week on the news that President Donald Trump still wants the big tax cut he promised as a candidate.

Treasury Secretary Steven Mnuchin has said, however, that Trump's tax plan would be paid for through economic growth.

Paul Ryan told a national television audience in February that the House will be working on "revenue-neutral tax reform".

Mr Trump hopes that the policy will accelerate economic growth by reducing tax burdens. This is a problem for Republicans because it means they would need Democratic support in the Senate to pass a tax overhaul.

The uncompetitiveness of America's corporate taxes is even starker when they are compared to trading partners.

If that's what Trump proposes, expect big pushback from pass-through entities, which make up the majority of USA businesses. If you have modest incomes and pay low tax rates, then a Roth-style 401 (k) is often a better option over the long run - as long as Roth accounts remain truly tax-free and don't also end up on the chopping block in Congress' search for revenue. However, the justification some lawmakers have come up with involves the potential impact on investment values that could come from corporate tax reform.

"That's on the list, but I think we seem to have our hands full right now with tax reform and healthcare", Spicer said at his daily briefing.

Now, there are ways to fiddle with the numbers to make a three-year cut feasible - the JCT projects it would add $6 billion to the deficit after the budget window, a number that, while large, can be likely be made up through various ways.

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