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Tax cuts to help most in middle-class, not all: White House
[WASHINGTON] President Donald Trump's top economic adviser on Thursday defended plans unveiled this week for sweeping tax cuts but said he could not guarantee they would benefit every middle-class taxpayer.
The White House has moved to defend the proposed tax overhaul, which is still being crafted, from criticism that it will unduly help the wealthiest Americans or blow a hole in the federal budget.
Opposition Democrats have denounced the plan as a massive tax giveaway to the rich.
"Our tax plan is aimed at making sure we give middle-class Americans a tax cut," National Economic Council Director Gary Cohn told reporters, adding that a family earning US$100,000 would see US$1,000 decrease in tax liability.
But he said that, given the multiplicity of local jurisdictions and the variety of financial situations Americans find themselves in, it was possible not everyone would benefit.
"You can find me someone in the country that their taxes may not go down," said Mr Cohn. "We have 50 states, we have counties, we have cities...we have all different kinds of structures in the tax code."
The outlines of the proposal involve cutting corporate tax rates from 35 per cent to 20 per cent, reducing the number of income tax brackets from seven to three and eliminating the so-called alternative minimum tax, which is designed to cut down on tax dodging, among other changes.
Leaked records published in March showed that, under the alternative minimum tax, Mr Trump was forced to pay US$31 million in 2005, suggesting that eliminating the provision could benefit him and other wealthy individuals like him.
PAYING FOR ITSELF?
In a break with tradition, Mr Trump, a billionaire who has assembled an exceptionally wealthy Cabinet, has refused to release his tax returns.
Preliminary evaluations say the cuts could reduce revenue by more than US$2 trillion over a decade. But Mr Cohn said on Thursday that the resulting rebound in economic activity would more than make up for lost revenues.
"Our plan is based on lowering rates, and expanding the base," he said, adding that reaching three per cent annual GDP growth would bring in more revenues.
"One per cent of GDP means US$3 trillion. It more than pays for a tax cut."
Economists, however, have cast doubt on the proposition that tax cuts can pay for themselves or that the United States is likely to return to three per cent annual growth on a sustained basis.
Official figures released on Thursday showed that the US had grown at an annual rate of 3.1 per cent in the second quarter, bringing growth in the first half 2017 to 2.2 per cent.
Mr Cohn said officials were also working to prevent wealthy individuals from taking advantage of proposals to cut taxes on so-called "pass-through" corporations, in which a company's income passes to its owners.
"Guys like myself should not be allowed to fit their assets into a partnership and reduce our tax liability by ten per cent," said Mr Cohn.