DES MOINES, Iowa – Here’s the reaction of Stephen C. Gara – Director of Drake University’s School of Accounting – to President Donald J. Trump’s tax plan: "At first blush, it seems like a really nice, attractive plan. The only problem is the details are lacking. It`s extremely vague.”
Meanwhile, U.S. Treasury Secretary Steven Mnuchin says the specifics of the plan will be forthcoming. "We`re working on lots of details, as to this, we have over a hundred people in the treasury that have been working on taxes scoring lots of different scenarios, this will pay for itself,” said Mnuchin at the unveiling of the plan in Washington, D.C. on Wednesday.
Mnuchin claims the plan will pay for itself, but how? “How’s he (President Trump) going to actually come up with the money, because obviously we`re talking about a pretty significant reduction of tax revenue, and the deficit`s already pretty large,” asked Director Gara.
The answer is growth, according to the Trump Administration. “They`re projecting it`ll be through growth, that with reduction of tax liabilities, people will have more income to spend,” said Gara.
While details may be lacking, Trump Administration officials did unveil some broad strokes of the plan, which would lower individual income tax rates, as explained by Gary Cohn, the Director of the National Economic Council. “Taking the current seven tax brackets we have today and reducing them to only three brackets: a 10% bracket, a 25% bracket and a 35% bracket.” The current rates are 10%, 15%, 25%, 28%, 33%, 35% and 39.6%.
But Gara says without more information, it's hard to know exactly who those tax cuts would affect. “While he proposes three rate brackets, there`s no information as far as what income levels those brackets would correspond to.”
What we do know is that the Trump plan would cut the top tax rate for all businesses, get rid of the alternative minimum tax and the estate tax.