Today's announcement is the result of years of work by our committee to overhaul the US tax code and provide meaningful tax relief for middle-class Americans while boosting our economy.
What is the middle class? "Tax relief in this package is focused on middle-class families".
The three new individual tax brackets would shave the taxes that people in the current highest bracket - 39.6 per cent - pay and slightly raise the minimum percentage income tax to 10 per cent.
Among the other proposals is a cut in repatriation taxes on offshore earnings, created to give corporations a break on profits earned overseas.
Also eliminated would be the personal exemptions, which let taxpayers deduct $4,050 per person in the household.
Under current law, almost 70 percent of taxpayers claim the standard deduction, while the remaining 30 percent itemize their deductions.
Additionally, the proposal doubles the standard deduction that most Americans take ($12,000 for a single person and $24,000 for a married couple).
The effort is further complicated by a GOP divided between fiscal "hawks" who want any tax cuts paid for by closing tax breaks to raise revenue and "supply-siders" who believe tax cuts will eventually pay for themselves by spurring economic growth.
Without releasing the tax brackets-the income level at which one tax rate ends and another begins-it's impossible to know who will win and who will lose from this change. "If enacted, there is no doubt such a plan would unleash economic growth, create jobs and increase wages". "There's about seven brackets now", said Burke.
"We will cut taxes tremendously for the middle class", Trump said Tuesday while flanked by members of the House tax-writing committee, including Chairman Rep. Kevin Brady, R-Texas, and Massachusetts Rep. Richard Neal, the panel's top Democrat.
What that means: There are now seven tax brackets, and this changes it to three.
Trump says it will also lower tax rates for businesses and seek to encourage corporations to bring back money held overseas.
In many Democratic states that have high local taxes, like California, New York, and New Jersey, they will see their state and local tax deduction reduced in order to help fund the federal cuts. Under the current worldwide system, US multinational corporations pay domestic tax on foreign earnings, which creates a competitive disadvantage for them. Ordinarily a bill needs 60 votes to avoid a possible filibuster.
It remains to be clarified how the tax cuts will be compensated for to balance the public accounts and avoid raising the deficit.