Donald Trump pushes huge business tax cuts

The US President wants to cut taxes for small business from a top rate of 39.6 per cent to 15 per cent.

Donald Trump plans to propose massive tax cuts for businesses big and small today.

Donald Trump plans to propose massive tax cuts for businesses big and small today as part of an overhaul he describes as the biggest in US history.

The US President wants to cut taxes for small-business owners from a top rate of 39.6 per cent to a top rate of 15 per cent, said an official with knowledge of the plan.

The top tax rate for individuals would be cut from 39.6 per cent to the “mid-30s”, the official said.

Treasury Secretary Steven Mnuchin last night confirmed Mr Trump’s plan would ­reduce the top corporate income tax rate from 35 per cent to 15 per cent.

The plan will also include childcare benefits, a cause promoted by Mr Trump’s daughter, Ivanka.

Republicans who slammed the growing national debt under Democrat Barack Obama said yesterday they were open to Mr Trump’s tax plan, even though it could add trillions of dollars to the deficit over the next decade.

Echoing the White House, Republicans on Capitol Hill argued that tax cuts would spur economic growth, reducing or even eliminating any drop in tax revenue.

“I’m not convinced that cutting taxes is necessarily going to blow a hole in the deficit,” said Republican senator Orrin Hatch, chairman of the Finance Committee.

“I actually believe it could stimulate the economy and get the economy moving.

“Now, whether 15 per cent is the right figure or not, that’s a matter to be determined.”

The argument that tax cuts pay for themselves has been debunked by economists from across the political spectrum.

The official scorekeeper for congress dealt the argument — and Mr Trump’s plan — another blow yesterday. The nonpartisan Joint Committee on Taxation said a big cut in corporate taxes — even if it is temporary — would add to long-term budget deficits.

This is a problem for Republicans because it means they would need Democratic support in the Senate to pass a tax overhaul that significantly cuts corporate taxes.

US Treasury Secretary Steve Mnuchin, left, enters a meeting with congressional leaders in Washington.

The assessment was requested by Republican House Speaker Paul Ryan, who has been pushing a new tax on imports to fund lower overall tax rates.

Senate Republicans have panned the idea, and officials in the Trump administration have sent mixed signals about it.

The import tax is not expected to be part of Mr Trump’s plan.

Mr Trump dispatched his top lieutenants to Capitol Hill yesterday to discuss his plan with Republican leaders. No Democrat was ­invited.

Afterwards, Senator Hatch called it “a preliminary meeting”.

“They went into some suggestions that are mere suggestions, and we’ll go from there,” he said.

Republicans have been working under a budget manoeuvre that would allow them to pass a tax bill without Democratic support in the Senate — but only if it did not add to long-term deficits.

Republican Senate Majority Leader Mitch McConnell said the Senate was sticking to that strategy.

“Regretfully we don’t expect to have any Democratic involvement in” a tax overhaul, Senator McConnell said. “So we’ll have to reach an agreement among ourselves.”

Democrats said they smelt hypocrisy over the growing national debt, which stands at almost $US20 trillion ($26.4 trillion). For decades, Republican legislators railed against saddling future generations with trillions in debt.

However, with Republicans controlling congress and the White House, there is no appetite at either end of Pennsylvania Avenue to tackle the long-term drivers of debt — social security and Medicare. Instead, Republicans are pushing for tax cuts and increased defence spending.

“I’m particularly struck by how some of this seems to be turning on its head Republican economic theory,” said senator Ron Wyden, the top Democrat on the Senate Finance Committee.

Democrat senator Bob Casey said: “On a lot of fronts, both the administration and Republicans have been contradictory, to say the least.

“There’s no question we should try to reduce (the corporate tax rate), but I don’t see how you pay for getting it down that low,” Senator Casey said. “Fifteen per cent, that’s a huge hole if you can’t make the math work.”

The Trump administration yesterday stuck with its assertion that tax reform could push economic growth above 3 per cent.

Commerce Secretary Wilbur Ross said the combination of changes on tax, trade and regulations pushed by the administration would accelerate economic gains.

“There is no reason that we should not be able to hit that — if not beat it,” Mr Ross said.

Many economists are sceptical that growth could consistently eclipse 3 per cent. The flow of workers into the US economy has slowed because of retirements by an ageing baby boomer population, while improvements in productivity have been sluggish.

Officials with the Federal Reserve estimate that the economy will grow at a 2.1 per cent clip this year and at 1.8 per cent in the longer term.

AP