The President Donald Trump yesterday (April 26th) made announcement which claimed to be “one of the biggest tax reductions in American history,” fulfilling on the major election promises, Trump administration has drastically reduced the tax rates both in business as well as individual categories.
The tax plan offers reducing top income tax rate from 39.6 percent to 35 percent, and increasing the amount to double, Americans putting down the ground for a 15 percent corporate tax rate.
Steven Mnuchin, the treasury secretary said that the US would move to a territorial tax system objected at giving relief to both small scale businesses as well as large corporations. The suggested corporate tax rate is a high drop from the existing 35 percent.
The tax cuts would “unlock” the US economy, give a huge boost up to businesses, create more jobs availability and bring trillions of dollars heaped up overseas by its firms, Mnuchin said at a joint White House News conference with the National Economic Director Gary Cohen.”This tax reform package is about economic growth and creating jobs,” Cohen said.
“We are going to double the standard deduction, so that a married couple won’t pay any taxes on the first USD 24,000 of income they earn. So, in essence, we are creating a zero Tax rate for the first USD 24,000 that a couple earns,” Gary said.
“The larger standard deduction also leads to simplification because far fewer taxpayers will need to itemize, which means their tax form can go back to that one simple page that I talked about earlier. Families in this country will also benefit from tax relief to help them with child and dependent care expenses,” he said.
Mnuchin said the aim is to make US businesses to be the most competitive in the world.
“Right now we have a 35 per cent corporate rate on worldwide income in deferral. It is perhaps the most complicated and uncompetitive business rate in the world. Not a surprise that companies leave trillions of dollars offshore,” he said.
“Under the Trump plan, we will have a massive tax cut for businesses and massive tax reform in simplification. As the president (Donald Trump) said during the campaign, we will lower the business rate to 15 per cent; we will make it a territorial system; we will have a one-time tax on overseas profits, which will bring back trillions of dollars that are offshore to be invested here in the US, to purchase capital and to create jobs,” Mnuchin said.