By CGTN’s Xia Cheng
US President Donald Trump proposed dramatic cuts in corporate and personal taxes on Wednesday in an overhaul his administration asserts will spur national economic growth and bring jobs and prosperity to America's middle class.
US President Donald Trump, center, speaks at the Department of the Interior in Washington, DC, US, on April 26, 2017. /VCG Photo
Trump's ambitious plan is alarming lawmakers who worry it will balloon federal deficits. And Washington needs to prove that the resulting economic growth will be enough to fill the hole in the federal budget. But small businesses don't share the same concern as the top tax rate is likely to drop to only 15 percent from 39.6 percent.
"It would impact my retained earnings. I could keep more money in my business without having to pay it out to myself immediately, or to the employees," said Rick McVey, a flower shop owner.
Other small business operators also believe that the lower tax will help small businesses to expand and come up with new products eventually.
"I think with lowering the tax, it will give me the opportunity to maybe buy more machines that I need, hire more people, give the people I have raises. So I think there are a lot of different options that can come into the whole process of him lowering the taxes," said Donna Sebusch, owner of Cookie Creations.
The plan might not help close the wealth gap in the US as it would reduce investment and estate taxes, helping the wealthy. But administration officials say several other tax breaks that help well-to-do taxpayers will be eliminated and the plan will largely help the middle class and create jobs.
US President Donald Trump speaks during an event in Kenosha, Wisconsin, US, on April 18, 2017. /VCG Photo
Still, economist Robert Brusca says the plan will actually do little for low income workers.
"While they're paring these individual brackets and knocking them down and giving us a little bit more choice and a little bit more reduction for the lower income levels, the fact that they take away the deductibility of state and local income taxes is going to have a disproportionately harsh impact on the large to high income states that already are paying heavily into the system and supporting the poorer states," he noted.
Trump's proposal still lacks the hard details about making the tax code simpler and more efficient in ways that don't add to the federal government's mounting debt. These are key Republican goals that would require lawmakers to eliminate precious tax breaks enjoyed by millions.
