President Donald Trump and Republican leaders plan to release a tax framework this week that would dramatically cut taxes for corporations and the wealthy, provide a measure of middle-class tax relief and punish some households in Democratic-leaning states like New York and New Jersey.

That summary, based on a list of details that’s circulating among Washington lobbyists, breaks from the president’s recent rhetoric against tax cuts for the rich. It sets the stage for a battle with Democrats and faces a litany of obstacles, including intra-party disputes about whether to pay for the tax breaks upfront or increase the deficit.

The emerging framework includes a proposal to cut the corporate tax rate to 20 percent from 35 percent -- a costly move in revenue terms that Trump and Republicans say is necessary to create job growth. But its provisions for individual taxes may hit closer to home for many Americans.

Three tax lobbyists familiar with those changes said they include cutting the top individual tax rate to 35 percent and creating a 25 percent rate for certain “pass-through” business owners -- both down from the current top rate of 39.6 percent. Such changes would cut taxes substantially for the top 1 percent of earners, said Kyle Pomerleau, an expert with the Tax Foundation, a right-leaning Washington policy group.

An analysis by Washington’s Tax Policy Center last year found that half of the business income earned by all pass-through businesses, such as partnerships and limited liability companies, goes to those making $693,000 or more annually -- placing them well within the top 1 percent of taxpayers by income.

“I don’t have a good way to thread the needle between the president’s promises and where they are,” said Republican economist Doug Holtz-Eakin. There’s a reason why individual income-tax cuts would tend to favor higher earners, he said: “The income tax is not a broad-based revenue-raiser anymore, it’s a surtax on high income people.”

Lowest Bracket

Trump, who’s planning to travel to Indiana to discuss the tax measures in a speech Wednesday, emphasized the benefits for lower earners Sunday. Asked to confirm that the top individual rate will be 35 percent, the president sidestepped the question and focused on the bottom rate -- which affects the lowest earners.

“We think we’re going to bring the individual rate to 10 percent or 12 percent, much lower than it is now,” he told reporters. “This is a plan for the middle class and for companies so they can bring back jobs. ” Actually, the lowest income-tax bracket in 2017 applies a 10 percent rate to taxable income of $9,325 or less. After that, a 15 percent rate applies to income up to $37,950.

Trump’s plan would double the standard deduction that benefits many middle-class Americans, making it the centerpiece of the tax relief Trump has promised them. It would also seek to pay for some of the tax cuts by ending the state and local tax deduction, which is used mostly by middle-to-high earners in high-tax states like California, New York and New Jersey. The tax break, which is worth more than $1 trillion over 10 years, is favored by representatives of influential industries, like real estate.

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