(Bloomberg)—President Donald Trump kicked off his campaign to cut tax rates for corporations and individuals, casting the proposal as an economic jolt that would boost hiring across the country.
“Our country and our economy cannot take off like they should unless we reform America’s outdated, complex” tax code, Trump said Wednesday at a speech at the Indiana State Fairgrounds in Indianapolis. He said his plan would deliver “the largest tax cut in history.”
The White House released the plan earlier in the day after a months-long negotiation between administration officials and top lawmakers on Capitol Hill. Trump is now counting on harnessing the populist support that elevated him to the presidency to provide the plan momentum.
The proposal would reduce the corporate tax rate to 20 percent -- down from the current maximum 35 percent -- and lower the tax burden for pass-through entities, including partnerships and limited liability companies. Trump cast the plan as likely to fuel an economic boom.
Trump argued that by eliminating the estate tax, small businesses and farms could more easily be transferred within families. And Trump said proposed changes to the income tax system would leave middle class Americans with more money in their pockets.
The president said that Indiana’s resurgent manufacturing sector was evidence of how tax cuts could benefit middle class families.
Trump said that tax cuts and deregulation under Mike Pence, the state’s former governor who is now vice president, provided Indiana a “powerful competitive edge.” In 2013, the year Pence took office, he reduced the state’s flat income tax rate from 3.4 percent to 3.23 percent. The next year, the state passed legislation lowering the corporate rate from 6.5 percent to 4.9 percent.
Since Pence signed the first tax cut in May 2013, manufacturing employment in Indiana has grown 8.5 percent, about twice the national average of 4 percent, according to the U.S. Bureau of Labor Statistics. But overall employment in Indiana has grown slightly more slowly than in other states, rising by 7 percent, lower than the 7.8 percent national average in the same period.
A tax overhaul was a centerpiece promise in Trump’s presidential campaign. It faces what could be a brutal fight in Congress among lawmakers who disagree on critical elements of the framework the White House released.
One influential skeptic has been Senate Finance Committee Chairman Orrin Hatch, a Utah Republican, who pledged his committee wouldn’t be a “rubber stamp” for the plan. Democrats have panned the plan as a giveaway for the rich.
“The last thing we should be doing right now is providing hundreds of billions in tax breaks to the wealthiest people and most profitable corporations in this country,” Senator Bernie Sanders, a Vermont independent who caucuses with the Democrats, said in an emailed statement. He called it “particularly obscene” to repeal the estate tax, “a $269 billion tax break to the top 0.2 percent.”
The Republican framework sets out three tax brackets for individuals -- 12 percent, 25 percent and 35 percent, down from the existing seven rates, which currently top out at 39.6 percent. The plan also calls for nearly doubling the standard deduction and substantially increasing the child tax credit while eliminating other tax loopholes.
But the administration hasn’t said how the new brackets would correspond with incomes, and didn’t provide concrete details about what deductions would be erased -- raising concerns that the changes could disproportionately advantage the wealthy.
Senator Joe Donnelly, an Indiana Democrat up for re-election next year who is likely to be a key vote on the tax bill, accompanied Trump on Air Force One for the flight from Washington and joined Trump at the event.
Donnelly was non-committal in a statement he issued shortly after Trump’s plan was released.
“I am hopeful that any tax reform proposal includes measures that support American workers as well as the middle class and encourage domestic investments,” Donnelly said.
The stop is Trump’s third trip to tout the tax overhaul in the home state of a Democratic senator up for reelection, following visits to Missouri and North Dakota. Administration officials say Trump could visit as many as a dozen more states over the next seven weeks as he tries to sell the plan.
--With assistance from Anna Edgerton, Ben Brody and Sahil Kapur. To contact the reporter on this story: Justin Sink in Washington at [email protected] To contact the editors responsible for this story: Alex Wayne at [email protected] Mike Dorning
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