A sweeping Republican tax overhaul plan backed by President Donald Trump calls for slashing rates on businesses and the wealthy but offers few details about how to pay for the cuts without driving up the federal deficit.
Hammered out over months of high-level talks among Trump aides and top Republicans in Congress, the plan would lower corporate income tax rates, cut taxes for "pass-through" businesses and reduce the top income tax rate for individual Americans, according to a framework seen by Reuters.
The future of the proposal, announced on Wednesday, was uncertain given that Republicans have produced no major legislative successes since Trump took office in January even though they control the White House and both chambers of Congress.
The tax plan was outlined the day after the Republicans' top legislative priority, an overhaul of the U.S. healthcare system, collapsed in the Senate, while another key item on Trump's wish list, infrastructure spending, has yet to materialize.
A comprehensive tax overhaul has eluded lawmakers for decades. The last one was passed in 1986. Trump has said the tax overhaul would provide tax relief to middle-class Americans.
Wall Street opened higher on Wednesday partly on rising expectations of a December interest rate hike, with a focus also on Trump's tax plan. Stocks later pared gains.
While it would lower the top individual rate from to 35 percent from 39.6 percent, the Trump plan would roughly double the standard deduction, a set amount of income exempt from taxation, for all taxpayers.
Deficit Worries
Republicans argue that the tax cuts would be offset by new revenues raised from eliminating tax loopholes and would drive more robust U.S. economic growth, predictions that critics are sure to question.
At a time of slow but steady U.S. economic expansion, the Trump tax-cut package has some support in Congress, even among Republican fiscal hawks who only a short time ago routinely opposed deficit-financed fiscal proposals.