WASHINGTON — One of the chief architects of the sweeping tax revamp proposed by President Donald Trump and congressional Republicans isn’t yet saying whether promised cuts under the plan would be retroactive to the start of the year.
“To be determined” was the response Monday from Rep. Kevin Brady of Texas, head of the tax-writing House Ways and Means Committee. There has been speculation the plan, which would deeply reduce levies for corporations, simplify everyone’s taxes and nearly double the standard deduction used by most Americans, would be applied retroactively to the beginning of 2017.
Trump and top administration officials are insisting that the plan would provide badly needed tax relief for the middle class – and wouldn’t benefit the wealthy.
The tax rate for Americans making a half-million dollars or more would drop by almost 5 percentage points as the wealthiest sliver of the nation would reap tremendous benefits. And the plan calls for eliminating the estate tax — paid by those with multimillion-inheritances, a boon for wealthy individuals who inherit businesses, investments and real estate. Also slated for elimination is the alternative minimum tax, a supplemental tax for certain individuals, corporations and estates that enjoy exemptions that lower their income tax bills.
The plan, the first major overhaul of the tax code in three decades, would shrink the number of tax brackets from seven to three. But it’s not known how it actually would affect individual taxpayers and families because the income levels corresponding to the three brackets haven’t yet been specified. It will be up to Congress to fill in many details.
Another unknown is how much the plan might add to the ballooning $20 trillion national debt.
The tax legislation can advance only after House and Senate passage of a blueprint for the federal budget. The Senate Budget Committee intends to vote on its plan this week, and a companion measure is headed for a House vote this week as well.
The new budget plan would permit the upcoming tax measure to add $1.5 trillion over the coming decade to the national debt.
Brady said he was hopeful that final budget legislation could be enacted this month, calling it the necessary “runway to land tax reform on.”