President Trump has begun the fight to deliver on one of his key campaign promises, to cut taxes by $6 trillion and reform the tax code.
"These tax cuts are significant," Trump told an audience in Indianapolis Tuesday. "There's never been tax cuts like what we're talking about."
The basics of the plan include:
- cutting the number of tax rates for individuals from seven brackets down to three; those rates would be 12, 25 and 35 percent, along with a surcharge for the very wealthy;
- cutting the tax rate for businesses from 35 to 20 percent, a number the president says he won't budge on;
- nearly doubling the standard exemption to $12,000 for singles and $24,000 for couples, meaning that money would be tax-free;
- keeping the deductions for charitable contributions and mortgages;
- getting rid of the deductions for state and local taxes, which would be a big hit for residents in liberal states with high taxes, like New York and California;
- and eliminating the estate tax, also referred to as the "death tax."
"Our framework includes our explicit commitment that tax reform will protect low income and middle income households, not the wealthy and well-connected. And it's not good for me (as a wealthy person). Believe me," Trump said.
But Democrats disagree, calling the plan a big windfall for the rich and a false promise to the middle class.
"It is a framework that gives away the store to the wealthiest while sticking it to the middle class," said House Minority leader Nancy Pelosi, D-Calif.
Trump and Republicans say it's a once in a generation opportunity. The president calls the current tax system a "relic" and a "colossal barrier" that's standing in the way of the nation's economic comeback.
Tax reform could require bipartisan support on Capitol Hill. The president is trying to reach out across the aisle.
"Democrats and Republicans in Congress should come together finally to deliver this giant win for the American people and begin a middle-class miracle," Trump said.
Some Democrats may go along, but a deal will be tough. And Republicans have many disagreements among themselves as well.
Republican Sen. Bob Corker of Tennessee warned that "tax reform is going to make health care look like a piece of cake."
But the president and congressional Republicans are hoping they can make the tax system much simpler for millions for Americans, meaning your own tax forms could be much easier to fill out.