WASHINGTON • President Donald Trump has proposed the biggest US tax overhaul in three decades, calling for tax cuts for most Americans, but prompting criticism that the plan favours business and the wealthy and could add trillions of dollars to the deficit.
Wednesday's proposal drew a swift, sceptical response from Senator Bob Corker, a leading Republican "fiscal hawk", who vowed not to vote for any federal tax package financed with borrowed money.
"What I can tell you is that I'm not about to vote for any Bill that increases our deficit, period," Mr Corker told reporters.
Mr Trump said his tax plan was aimed at helping working people, creating jobs and making the tax code simpler and fairer.
But it faces an uphill battle in Congress, with Mr Trump's own Republican Party divided over it and Democrats hostile.
The plan would cut corporate and small-business income tax rates, reduce the top income tax rate for high-earning individuals and scrap some popular tax breaks, including one that benefits people in high-tax states dominated by Democrats.
Forged during months of talks among Mr Trump's aides and top congressional Republicans, the plan contained few details on how to pay for the tax cuts without expanding the budget deficit and adding to the nation's US$20 trillion (S$27.2 trillion) national debt.
•Collapse the current seven income tax brackets into three: 12 per cent, 25 per cent and 35 per cent. This would raise the bottom tax rate on low-earning Americans to 12 per cent from 10 per cent.
•Cut corporate tax rate from 35 per cent to 20 per cent.
•Lower top individual income tax rate from 39.6 per cent to 35 per cent.
•Create a 25 per cent tax rate for "pass-through" firms which are usually small, private enterprises that give their profits directly to individuals. They represent about 95 per cent of all businesses in the US.
•Eliminate inheritance tax.
•Keep deductions for mortgage interest and charitable giving that are vital to wealthy taxpayers.
•Eliminate some unspecified tax breaks including the one for state and local tax payments that could especially hurt people in high-tax states like California and New York.
WASHINGTON POST, REUTERS
The plan still must be turned into legislation, which is not expected until after Congress makes progress on the fiscal 2018 budget, perhaps in October. It must then be debated by the Republican-led congressional tax-writing committees.
Analysts were sceptical that Congress could approve a tax Bill this year, but that is what Republicans hope to achieve so they can enter next year's congressional election campaigns with at least one legislative achievement to show for 2017.
Financial markets rallied on the plan's unveiling, an event long anticipated by traders betting that stocks would benefit from both faster economic growth and inflation.
At an Indianapolis event, Mr Trump called the plan the largest tax cut in US history. "We want tax reform that is pro-growth, pro-jobs, pro-worker, pro-family and, yes, tax reform that is pro-American."
The real estate mogul-turned-politician, who promised big tax cuts as a candidate, told reporters he personally would not gain financially from the proposal.
Republicans have produced no major legislative successes since Mr Trump took office in January, even though they control the White House and Congress. A comprehensive rewrite of the tax code has eluded previous presidents and Congress for decades. The last one was passed in 1986 under Republican president Ronald Reagan.
Mr Trump has urged Democrats to back the plan, although they were not consulted in drafting it.
Democrats said the plan would expand the federal deficit in order to deliver tax cuts to wealthy Americans rather than the middle-class families that Mr Trump and Republicans say they want to help.
The Committee for a Responsible Federal Budget, a Washington-based group, estimated the plan had US$5.8 trillion of total tax cuts over a decade and would have a net cost of US$2.2 trillion through 2027.
Mr Trump, faced with the latest congressional failure to undo Obamacare, also said on Wednesday he was working on an executive order to expand access to health insurance and would negotiate with Democrats for a legislative solution by next year.