The White House rolled out the opening salvo of President Donald Trump’s massive tax cut plan Wednesday, but the one-page set of bullet points was missing some significant details.
The plan, laid out by Treasury Secretary Steven Mnuchin and National Economic Council Director Gary Cohn, called for three new income-tax brackets, with rates of 10%, 25%, and 35%, down from the current seven brackets.
What the plan does not detail are the income levels associated with each bracket. Currently, for instance, a joint filing couple making between $US18,650 to $US75,900 pays a 15% effective rate. It’s unclear where that level of income would fall under the Trump plan.
For instance, if the new bracket for the 10% rate only extends to married couples making up to $US75,000 annually, Americans making $US75,001 could see their taxes jump to the 25% rate.
In response to a question, Cohn said a family of four making $US60,000 would have a lower tax rate, but did not provide further details.
Another key missing detail pertains to the repatriation tax. The one-time tax would allow companies to bring profits held overseas back into the US at a lower tax rate.
This isn’t a new idea: A similar repatriation was carried out under President George W. Bush in 2004. Unlike the earlier proposal, which taxed the money coming back in at 5.25%, the new plan released on Wednesday did not provide any detail on the rate.
Republican congressional leaders said the initial plan “will serve as critical guideposts for Congress and the Administration as we work together to overhaul the American tax system.” But many economists decried the lack of details in the Trump plan.
“Nearly six months after the election, the administration’s tax proposals amount to less than a single side of paper,” Paul Ashworth, chief US economist at Capital Economics, said in a note to clients following the release.
“The best that can be said is that the president is laying out his opening bid in what could prove to be a very long and fraught negotiation,” Ashworth continued.
Citi analysts said the announcement was an “an underdelivered ‘big announcement’ from the Trump administration.”
Or as Brookings Institution economist and New York Times columnist Justin Wolfers put it, “I have been to interpretive dance performances which contain more detail on the tax code.”
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