- White House Unveils Trump’s Opening Tax-Cut Bid
The White House made its opening bid for what officials called the “biggest tax cut” in U.S. history — with cuts that would benefit businesses, the middle class and certain high-earning individuals — but left unanswered questions about whether the plan would be paid for, or how.
A list of goals for the tax overhaul, unveiled by President Donald Trump’s top economic adviser Gary Cohn and Treasury Secretary Steven Mnuchin Wednesday, calls for slashing the federal income-tax rate to 15 percent for corporations, small businesses and partnerships of all sizes. It also imposes a one-time tax on about $2.6 trillion in earnings that U.S. companies have parked overseas. The plan would end the taxation of corporations’ offshore income by moving to a territorial system, in which most foreign profits would be exempt from U.S. taxes. Currently, the U.S. taxes business income no matter where it’s earned.
On the individual side, it proposes condensing the existing seven income-tax rates to just three, cutting the individual top rate to 35 percent from 39.6 percent. It would also end a 3.8 percent net investment income tax that applies only to individuals who earn more than $200,000 a year, repeal the alternative minimum tax and eliminate the estate tax, which currently applies only to estates worth more than $5.49 million for individuals and $10.98 million for couples.
At the same time, the plan would eliminate the federal income-tax deduction allowed for state and local taxes — a provision that would hit high earners in high-tax states, including New York and New Jersey. The only itemized deductions that would be preserved under the plan would be for home mortgage interest and charitable contributions.
“We are determined to move as fast as we can and get this done this year,” Mnuchin said.
The move to tax partnerships, limited liability companies and other so-called “pass-throughs” at 15 percent would represent a major tax cut for many businesses — from mom-and-pop grocers to hedge funds — including Trump’s own business empire. Under current law, those companies pass their earnings and deductions through to their owners, who then are taxed at their individual income tax rates.
Shortly after the election, Mnuchin said Trump’s tax plan would provide “no absolute tax cut for the upper class.”
It wasn’t immediately clear Wednesday whether the plan would pay for itself; Mnuchin and others have said it would stimulate enough economic growth to cover the cost of the tax cuts. Economists have called that proposition into question — raising questions about whether any tax cuts it proposes would have to be temporary under congressional rules.
“This is going to be the biggest tax cut and the largest tax reform in the history of our country and we are committed to seeing this through,” Mnuchin said at an event in Washington on Wednesday morning.
The plan’s scant detail made it difficult to immediately assess its economic impact. Kyle Pomerleau, director of federal projects at the Tax Foundation said in a Twitter message: “Sorry, friends. We cannot model this. Definitely not enough detail.”
Trump’s goal of enacting a large tax cut faces daunting obstacles in Congress, including surefire Democratic opposition. The Republican Party is divided on how and whether the plan should be paid for. And a Senate rule prevents any tax plan from adding to the federal deficit outside a 10-year window — if it’s enacted with a simple majority rather than 60 votes, a procedure known as budget reconciliation.
Mnuchin said lawmakers in the House and Senate agree with the White House on core business rates, creating a middle-income tax cut and stimulating the economy.
“We want to look at every avenue, but we think reconciliation is the preferred process, we think that’s the most logical process to bring tax reform through,” Ryan said to reporters Wednesday. Senate Majority Leader Mitch McConnell said Tuesday he doesn’t expect to have Democratic involvement on the tax plan.
Senator Chuck Schumer, the Democratic leader, promised opposition to a tax plan that gives breaks to the highest earners.
“If the president’s plan is to give a massive tax break to the very wealthy in this country — a plan that will mostly benefit people and businesses like President Trump’s — that won’t pass muster with we Democrats,” he said Wednesday morning on the Senate floor. “We don’t need a tax plan that allows the very rich to use pass-throughs to reduce their rates to 15 percent while average Americans are paying much more.”
The White House proposal didn’t specify whether a tax plan should be revenue-neutral — if it isn’t, the cuts would expire within a decade. It didn’t take a position on revenue-raisers that House Republican leaders have proposed, including a border-adjusted tax on imports and domestic sales.
The White House proposal mirrors parts of the tax plan Trump proposed during the campaign, which would cost the government $6.2 trillion in the first decade, and more than $20 trillion by 2036 after accounting for interest costs and macroeconomic factors, according to an analysis by the nonpartisan Tax Policy Center.
Cohn and Mnuchin briefed Ryan and McConnell, along with House Ways and Means Chairman Kevin Brady and Senate Finance Chairman Orrin Hatch on Tuesday afternoon. As Hatch left, he tempered expectations of the White House and Congress coming to agreement on key tax questions in the foreseeable future.
“It’s too early,” Hatch told reporters. “We’re just getting into it.”
China and EU Seek Partnership: Xi Jinping Proposes Key Trade Alliance
Chinese President Xi Jinping expressed his desire for China and the European Union (EU) to become key trade partners and foster trust in supply chains, during a meeting with EU leaders in Beijing.
The talks marked the first in-person summit between the two sides in four years and addressed a range of economic concerns, including data flows and market access.
Xi emphasized China’s commitment to high-quality development and opening up, positioning the EU as a crucial partner in economic and trade cooperation.
He envisioned the EU as a trusted collaborator in industrial and supply chain cooperation, aiming for mutual benefits and win-win results.
The summit delved into longstanding issues, such as efforts by Europe to “de-risk” its supply chains and the EU’s anti-subsidies investigation into Chinese-made electric vehicles.
China criticized the investigation, urging the EU to avoid using it for “trade protectionism.”
Xi called for the elimination of interference between China and the EU, a statement likely directed at the United States, which has taken actions, including enlisting the Netherlands, to curb China’s development of high-end semiconductors.
The EU leaders, Ursula von der Leyen and Charles Michel, described their conversation with Xi as “good and candid.”
They discussed the main challenges amid increasing geopolitical frictions, emphasizing a commitment to balanced trade relations and pledging to enhance people-to-people exchanges.
During the meeting, Italy formally informed China of its exit from the Belt and Road Initiative, highlighting ongoing strains between the EU and China.
Xi discussed Belt and Road with EU leaders, expressing a willingness to connect it with the EU’s Global Gateway infrastructure plan.
However, deep issues remain, including Russia’s war in Ukraine, trade imbalances, and Chinese overcapacity exported to Europe.
Jens Eskelund, president of the European Union Chamber of Commerce in China, stressed the need to address these issues to foster a positive relationship between Beijing and Brussels.
UAE Commits $30 Billion as COP28 Climate Talks Kick Off in Dubai
Nigeria Eyes BRICS Membership within Two Years as Foreign Minister Emphasizes Strategic Alignment
In a strategic move towards global economic collaboration, Nigeria is aspiring to join the BRICS group of nations within the next two years.
The Minister of Foreign Affairs, Yusuf Tuggar, affirmed that Nigeria is open to aligning itself with groups that demonstrate good intentions, well-meaning goals, and clearly defined objectives.
Tuggar stated, “Nigeria has come of age to decide for itself who her partners should be and where they should be; being multiple aligned is in our best interest.”
He emphasized the need for Nigeria to be part of influential groups like BRICS and the G-20, citing criteria such as population and economy size that position Nigeria as a natural candidate.
BRICS, comprising Brazil, Russia, India, China, and South Africa, stands as a formidable bloc of emerging market powers.
In a recent move to expand its influence, BRICS invited six additional nations, including Saudi Arabia, Iran, Egypt, Argentina, Ethiopia, and the United Arab Emirates, to join the group.
Nigeria, as Africa’s largest economy, has been absent from the BRICS alliance, prompting discussions on the potential economic and political advantages the bloc could offer the country.
Analysts have noted that BRICS membership could provide Nigeria with significant leverage on the global stage.
Vice President Kashim Shettima clarified that Nigeria did not apply for BRICS membership after the bloc’s announcement of new members in August.
Shettima emphasized the principled approach of President Bola Ahmed Tinubu, highlighting a commitment to consensus building in decisions related to international partnerships.
As Nigeria eyes BRICS membership, the move is seen as a strategic step towards enhancing its global economic and diplomatic influence.
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