The Trump administration has proposed slashing the rate of corporation tax with the aim of spurring economic growth, the Treasury Secretary said.
Steven Mnuchin unveiled President Trump’s blueprint, which aims to cut the business tax rate from 35% to 15%.
Economists say the policy would add trillions of dollars to the deficit over the next decade.
But Mr Mnuchin said the tax plan would pay for itself “through growth, through deductions and closing loopholes”.
Secretary Mnuchin, joined White House chief economic adviser Gary Cohn on Wednesday to announce the tax proposal, which he billed as “the biggest tax cut” in history, but it is unclear whether that will really prove to be the case.
The Republican president’s plan will act as a guide for Congress as they try to pass a tax reform bill in the months ahead.
It could face resistance from fiscal hawks within his own party.
Democrats are highlighting the fact that Mr Trump’s own tax liability from his businesses would shrink under his blueprint, saving him millions.
Democratic Party chairman Tom Perez renewed a call for Mr Trump to release his tax returns to better understand how much he would gain from the plan.
“We must know how much Trump would personally financially benefit from his own proposal,” he said.
Also mentioned in the president’s broad outline:
- some sort of repatriation tax, giving big companies an incentive to bring back money they hold overseas
- tax breaks for childcare expenses
- doubling the amount of standard tax deduction
- a cut in individual rates, although few details expected yet
- more tax rate cuts for hedge funds, and other enterprises that pay taxes at individual rates
- eliminate seven existing tax brackets and replace them with three brackets at rates of 10%, 25% and 35%
Mr Trump’s blueprint is not expected to include any proposals for raising new revenue.
The much-discussed border tax that would put a tariff on imports – favoured by House Speaker Paul Ryan – will not be in the plan.