WASHINGTON: President Donald Trump’s top economic adviser on Thursday defended plans unveiled this week for sweeping tax cuts but said he could not guarantee they would benefit every middle-class taxpayer.
The White House has moved to defend the proposed tax overhaul, which is still being crafted, from criticism that it will unduly help the wealthiest Americans or blow a hole in the federal budget.
Opposition Democrats have denounced the plan as a massive tax giveaway to the rich.
“Our tax plan is aimed at making sure we give middle-class Americans a tax cut,” National Economic Council Director Gary Cohn told reporters, adding that a family earning $100,000 would see $1,000 decrease in tax liability.
But he said that, given the multiplicity of local jurisdictions and the variety of financial situations Americans find themselves in, it was possible not everyone would benefit.
“You can find me someone in the country that their taxes may not go down,” said Cohn. “We have 50 states, we have counties, we have cities…we have all different kinds of structures in the tax code.”
The outlines of the proposal involve cutting corporate tax rates from 35 percent to 20 percent, reducing the number of income tax brackets from seven to three and eliminating the so-called alternative minimum tax, which is designed to cut down on tax dodging, among other changes.
Leaked records published in March showed that, under the alternative minimum tax, Trump was forced to pay $31 million in 2005, suggesting that eliminating the provision could benefit him and other wealthy individuals like him.
Paying for itself?
In a break with tradition, Trump, a billionaire who has assembled an exceptionally wealthy Cabinet, has refused to release his tax returns.
Preliminary evaluations say the cuts could reduce revenue by more than $2 trillion over a decade. But Cohn said Thursday that the resulting rebound in economic activity would more than make up for lost revenues.
“Our plan is based on lowering rates, and expanding the base,” he said, adding that reaching three percent annual GDP growth would bring in more revenues.
“One percent of GDP means $3 trillion. It more than pays for a tax cut.”
Economists, however, have cast doubt on the proposition that tax cuts can pay for themselves or that the United States is likely to return to three percent annual growth on a sustained basis.
Official figures released Thursday showed that the US had grown at an annual rate of 3.1 percent in the second quarter, bringing growth in the first half 2017 to 2.2 percent.
Cohn said officials were also working to prevent wealthy individuals from taking advantage of proposals to cut taxes on so-called “pass-through” corporations, in which a company’s income passes to its owners.
“Guys like myself should not be allowed to fit their assets into a partnership and reduce our tax liability by ten percent,” said Cohn.