DONALD TRUMP AND the Republican Party unveiled a plan to radically reform the tax regime in the US yesterday, including a sharp fall in corporate tax rates that would bring the country closer to Ireland’s rate of 12.5%.
Trump has long promised to lower taxes in a bid to boost the American economy and the plan sees the corporate tax rate cut from 35% to 20%.
The plan also seeks to encourage firms to bring back profits that have accumulated abroad by offering a one-time, low tax rate on wealth brought back from overseas.
In the past, Irish employers group Ibec warned that plans by the US to slash corporate rates could pose a “competitive challenge to Ireland”.
“I’ve been waiting for this for a long time”
At a press conference at Trump Tower last month, the US President said that he would cut down on regulations for construction projects like motorways, and aim to bring manufacturing jobs back from other countries – namechecking Ireland.
Trump said: “You have to bring it back to this country, you can’t do it in Ireland and all of these other places. You have to bring this work back to this country so that American workers can benefit.”
Speaking on his new proposals, Trump dismissed the existing US tax code as a “relic” that impedes economic growth.
He also called the plan the “largest tax cut, essentially, in the history of our country”.
Trump told a crowd in Indianapolis: “I’ve been waiting for this for a long time.”
Cutting corporate taxes, he said, “is a revolutionary change, and the biggest winners will be middle class workers as jobs start pouring into our country, as companies start competing for American labour, and as wages continue to grow”.
For households, the Republican plan cuts the number of tax brackets from seven to three, with a maximum rate of 35%, against 39.6%, although the plan also mentions the “potential” for an additional top rate for the highest-income taxpayers.
“Perverse”
Opposition Democrats savaged the reform proposal as a “perverse” system for rewarding the wealthy, and called out Trump for failing to help working and middle-class American families.
Senate minority leader Chuck Schumer told reporters that while Trump has “talked the talk” on tax reform by aiming the benefits at the middle class, “he ain’t walking the walk”.
“This is aimed at the wealthiest people in America, they do far and away the best” under the proposal, Schumer said.
Commenting on initial plans to change the US’s corporate tax rate, Ibec said that the announcement was just one in “a long line of challenges that Ireland’s economic model has faced in recent years”.
“We have come through previous challenges stronger than ever and we must use every opportunity to champion internationally the depth, diversity and development of the Irish business model,” said Ibec’s director of policy and public affairs, Fergal O’Brien.
With reporting from AFP - © – AFP, 2017
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