Trump administration reveals plan for sweeping tax cuts

Treasury Secretary Steve Mnuchin said President Trump is determined to "unleash economic growth for businesses"

Trump administration reveals plan for sweeping tax cuts

Steve Mnuchin. Picture by: Andrew Harnik/AP/Press Association Images

The Trump administration has revealed details of its plans to introduce sweeping changes to the US tax code.

The headline proposal is a dramatic cut to the business tax rate in the country, from 35% to 15% - a change which would affect large corporations and small businesses alike.

In addition, the administration is proposing a 'one-time tax' on American companies' profits held overseas in a bid to attract them back to the US. 

According to the New York Times, a proposed territorial tax would see companies' international earnings exempt from taxation while encouraging corporations to keep their headquarters in the US.

In addition to the business tax changes, the proposals would also see tax cuts for individuals, with the current seven tax brackets reduced to only three (10%, 25% and 35%).

While the proposals would see cuts for low income earners, wealthy Americans would also see major benefits. The highest tax rate would be an almost 5% reduction on the current rate.

The administration has appeared to drop any immediate plans for a 'border adjustment tax' that it had previously put forward.

Announcing the proposed tax reforms today, US Treasury Secretary Steve Mnuchin explained: "The President is determined to unleash economic growth for businesses.

"This is not just about large corporations - small and medium sized businesses will be eligible for the business rate as well."

Mr Mnuchin did not answer questions on whether President Trump himself would benefit from the proposals.

"Rigged economy"

Currently, the plans are only an outline, and the final version will need to be approved by Congress.

While administration officials have insisted the sweeping tax cuts will 'pay for themselves' by stimulating economic growth and eliminating various reductions & loopholes, others have raised concerns that the proposed cuts could significantly increase the US national debt.

Senator Bernie Sanders, meanwhile, suggested that the plan would make a "rigged economy" even worse:

Irish group IBEC said that the proposals "could provide some competitiveness pressure" for Ireland, but tthehose implications would be "less serious" than earlier proposals such as a border adjustment tax.

The group's Director of Policy and Public Affairs, Fergal O'Brien, observed: “There will be plenty of obstacles to overcome to reach implementation stage of the proposal to cut the US headline corporate tax rate to 15%; not least that it represents a massive fiscal cost of $2 trillion over its first ten years.

"Even if the US succeeds in delivering a substantial rate cut, the proposition for US firms to invest in Ireland remains compelling. Fundamentally, the majority of US firms use Ireland as a platform to access the EU and other international markets. This will remain the case no matter what the US tax rate is," he added.