Liam Delahunty and Shirley Lam discuss the Trump administration's proposed new tax reform package.
On 27 September 2017, the Trump administration and the tax writing committees in the United States released their Unified Framework For Fixing Our Broken Tax Code (the Framework). The latest in a series of proposals promulgated by various parties, the Framework for tax reform is underpinned by four principles: making the tax code fair and simple, providing middle-class workers with tax cuts, creating more jobs by cutting the tax rate for businesses, and bringing funds kept offshore back to the United States.
While the precise measures are to be drafted, key changes proposed in the Framework include:
Notwithstanding the Framework provides cuts to the headline tax rates above, state taxes will continue to apply to individuals and businesses.
The next step is for the administration to prepare budget resolutions for reconciliation. Some economists estimate that the cost of the proposed package will total more than US$5 trillion.
A critical hurdle is that any forthcoming tax bill will be subject to approval by Congress. Recent history suggests this may well prove challenging.