US President Donald Trump’s proposed tax cuts for individuals and businesses could add trillions of dollars to the country’s budget deficit and would significantly benefit the wealthy, according to fiscal experts and lawmakers.
The White House unveiled a one-page plan on Wednesday proposing deep US tax cuts, many for businesses, that would make the federal deficit balloon if enacted by Congress. Only Congress can make major tax law changes, and Democrats immediately attacked the Republican president’s plan as fiscally irresponsible.
“President Trump’s tax plan is short on details and long on giveaways to big corporations and billionaires,” said Nancy Pelosi, the top Democrat in the House of Representatives. On Wednesday, US Treasury Secretary Steven Mnuchin said Trump’s plan would “pay for itself with growth” and closing of some deductions and credits.
Mnuchin said the Trump administration will overhaul America’s “very uncompetitive” tax system with what he said would be “the biggest tax cut” in US history. However, economists say the plan is not nearly enough to replace lost revenues, while rising deficits could even take back some of the economic gains. Among the proposals are a reduction in the corporation tax rate from 35 percent to 15 percent, and an easing of tax for small businesses to the same rate.
The plan could add $3 trillion to more than $5 trillion to the federal deficit over five years, said Maya MacGuineas, who heads the Committee for a Responsible Federal Budget (CRFB), a budget watchdog group. CRFB estimates that to pay for the plan, US growth would need to be sustained at 4.5 percent annually, a level not seen on a sustained basis since the late 1960s and early 1970s.