President Donald J. Trump outlined key aspects of his tax reform agenda and promised bipartisan cooperation with Congressional leaders.

In a speech in Bismarck, North Dakota, President Trump said that the administration is working to develop a reform plan that would result in tax cuts for businesses and families "at every level." He said that the plan represents a "sharp reversal" from previous policies, and highlighted three central goals: simplification, middle income tax cuts and business tax reform.

President Trump said that the administration is committed to simplifying the tax code. He explained American taxpayers spend 6 billion hours each year on tax code compliance efforts, and vowed that "95 percent of Americans will be able to file their tax returns on a single page."

Second, the President stated that there would be tax cuts for middle-income families. He said that the administration would provide relief "through a combination of benefits," including raising the standard deduction, increasing the child tax credit, and slashing tax rates.

Third, President Trump committed to "restor[ing] the competitive edge" that would allow for job creation and higher wages. He argued that businesses of all sizes would benefit from a significant tax cut. He also said that he would support the switch from a "worldwide" system to a "territorial" system, which would incentivize businesses to conduct their operations domestically.

President Trump pledged to close special-interest loopholes and promised to end the inheritance tax, which he characterized as presenting a "tremendous burden for the family farmer."

Commentary / Mark Howe

Tax reform may be taking shape as follows:

  1. tax cuts for middle-income earners;
  2. tax cuts for businesses (to make U.S. tax rates on business internationally competitive); and
  3. some form of repatriation.

To "pay" for these "reforms" Congress will need to limit tax cuts for upper-income earners and hunt for revenue raisers, including a limit on SALT deductions, mark-to-market for derivatives, and some form of carried interest tax.

The open political question is whether there is near unanimity among Congressional Republicans for this. If not, the challenge for the Trump Administration will be wooing enough Democrats to compensate for Republican defections.

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