US unveils ‘historic tax cuts’ that could add $1.5trn to federal deficit

3 Nov 17

The United States has unveiled the new legislation for its “historic tax cuts and reforms”. 

On Thursday the 429-page ‘Tax Cuts and Jobs Act’ was released, a bill that would cut the corporate tax rate from 35% to 20% and could save the average American family of four about $1,182 on their tax bill. 

It is believed the tax cuts could add up to $1.5trn to the federal deficit over the next decade

President Donald Trump said the bill was a “big, beautiful Christmas present” for families. Republican leaders expect the bill to win approval by the end of the year. 

Trump said: “My tax reform priorities have been the same since day one: bringing tax cuts for hardworking, middle-income Americans; eliminating unfair loopholes and deductions; and slashing business taxes so employers can create jobs, raise wages, and dominate their competition around the world.”

But Democrats have said the plan favours corporations and the wealthy and would raise taxes on the middle class.

The standard tax deduction would increase from $6,350 to $12,000 for individuals and from $12,700 to $24,000 for married couples.

Child tax credits would expand from $1,000 to $1,600 per child and federal deductions for state and local income and sales taxes will be eliminated.

Corporate profits from abroad would no longer be taxed, but US foreign subsidiaries could see a minimum 10% tax rate.

Trump said Thursday that economic confidence was “skyrocketing” and the country’s GDP grew 3% in the last quarter.

But he said the administration was “just getting started” and still has much work left to do.

He said: “My administration will work tirelessly to make good on our promise to the working people who built our nation and deliver historic tax cuts and reforms – the rocket fuel our economy needs to soar to higher than ever before.”

The US president outlined the major tax cuts, which he described as “the largest tax cut in [the] country’s history”, in September.

Last month, the US House of Representatives and the Senate passed a budget blueprint which paved way for the tax reforms.  

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