The White House released a plan for tax reform Wednesday without the Hill’s unified backing, and though it doesn’t do much to detail a concrete path forward for reform, the border adjustment tax wasn’t a part of the plan.
In a statement Wednesday, the White House praised President Trump for leading what’s expected to be “one of the biggest tax cuts in American history.”
The tax reform—as the Administration presents it—looks to be a big win for businesses. The corporate income tax would come down from 35 percent to 15 percent under the new plan, and as Gary Cohn, Trump’s chief economic advisor and director of the National Economic Council explained, cutting taxes for businesses will make them more competitive.
Outside of business, the president wants to reduce the current number of tax brackets from seven to just three, double the standard deduction for married couples, repeal the death tax and eliminate federal tax deduction for state and local income tax.
Praise for the new plan aside, the White House left out any mention of how the tax reform plan would make it through the House and the Senate or how it would be paid for.
What does this mean for sourcing and retail?
For now, it seems Trump isn’t keen on a border adjustment tax that would have replaced the current 35 percent corporate income tax with a 20 percent tax on American companies’ domestic sales and imports. Exports, however, would be exempt from the tax.
An article in The New York Times, giving a rundown of who the winners and losers of this new plan are, pointed to big wins for businesses and the wealthy.
Some of the winners? Businesses with high tax rates, retailers who have spent recent months living in fear over the border adjustment tax and “people with creative accountants.”
“The Trump administration did not embrace House Republicans’ big strategy to pay for the tax cut, which was strongly opposed by the retail industry and others that thought they would be losers,” according to the Times.
For those who have accountants savvy in finagling, the 15 percent corporate tax rate that would be in effect under the new plan could provide a loophole for companies to get business income via a limited liability company or another pass-through entity instead of as wages, the Times explained.
There seems to be little on the losing end for businesses, but the tax plan could face a host of roadblocks from both sides of the aisle as leaders on the Hill are divided over the plan and many are still wondering what a concrete path forward will look like.
“This is not going to be easy. Doing big things never is. But one thing is for certain: I would not bet against this president. He will get this done for the American people,” Cohn said in a statement.
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