The GOP’s tax plan, which has been gaining steam in recent days, would slash corporate taxes by as much as 10 percent in a bid to bring back trillions of dollars in lost revenue.
That could mean $1 trillion in savings over a decade, according to a recent analysis by the Tax Policy Center.
But a top GOP aide insisted the plan would add $1.2 trillion in new revenue, without a net change in federal tax rates.
The plan is also a huge win for corporations and a major boost for the wealthy, which are the key drivers of U.S. economic growth.
But it would also have big implications for workers, particularly the poor, who are among the most vulnerable to a tax hike.
It would slash workers’ tax bills by up to $10,000.
Under the GOP plan, all corporations would be taxed at the same 35 percent rate, with a 20 percent tax on the capital gains that corporations are allowed to deduct.
That would leave workers at a huge disadvantage when it comes to paying their bills.
A lot of people, particularly people who are not working, are going to be hit particularly hard, especially the low-income workers, the adviser said.
Even a huge corporate tax cut could not create enough revenue to pay for all of the tax cuts the GOP is offering.
The Republican proposal, known as the “Cadillac Tax,” would raise $7.6 trillion over 10 years.
That’s the biggest tax cut of any major tax overhaul in recent history.
If the GOP cuts corporate taxes to 10 percent, it would only raise $1,917 billion.
Another key point of contention is how much of that new revenue the GOP would get from cutting taxes on individuals.
That depends on the details of how it proposes to distribute the tax cut to the middle class, and how much it pays for it.
There are several ways the GOP could try to shift the burden of its tax cut onto the middle classes.
Its own proposal to eliminate the estate tax would be an example.
It proposes to reduce the amount of money individuals have to pay tax on, from around $10 million today to about $2 million in 2025.
That money could then be used to lower taxes on income for all families, with the exception of married couples.
It could also use the estate as a way to lower the corporate tax rate to 20 percent, which is lower than the current 35 percent corporate rate.
At that rate, the estate would be worth $25.5 billion by 2025, and it would still take about $7 trillion in tax cuts to pay it off.
Republicans argue the GOP tax cut would only be offset by other revenue from a variety of sources.
The nonpartisan Tax Policy Centers estimated that eliminating the estate taxes and replacing them with a lower corporate rate could raise $8.8 trillion in 2025, compared to a $15.9 trillion increase in the corporate rate alone.
“We have a lot of options to deal with that, and we’re looking at the middle of them,” said GOP Ways and Means Committee Chairman Kevin Brady, R-Texas.
And the Trump administration could also choose to use the corporate income tax cut as a mechanism to offset the massive tax cuts Republicans propose to enact over the next decade.
That would cut taxes for corporations to a rate of 20 percent for individuals, and a 35 percent tax rate for corporations.
But the GOP plans also include a proposal to cut the corporate alternative minimum tax, or AMT, by $1 for every $1 of profits.
Currently, the AMT is a levy on companies.
It’s paid by workers at companies that hire them.
It applies to workers who receive unemployment benefits, but not those who get them in exchange for doing work for companies that pay them.
Critics of the GOP’s plan say that it’s too complicated to understand, and that it would not provide the tax relief needed to offset all of its proposed tax cuts.
One potential option would be to offset some of the corporate AMT cuts by eliminating the Alternative Minimum Tax.
That means the rate would drop to 25 percent for the first $5 million of profits and 25 percent on those earnings up to a maximum of $10.5 million.
By 2020, that would bring the AMt rate to a mere $1 per $1 in profits.
The Tax Policy centers estimates would then be reduced to a total of $3.3 trillion over a 10-year period.
That leaves $3 trillion to offset a 10 percent corporate tax increase, and $1 billion to offset reducing the AMte rate.
The GOP’s corporate tax cuts would have the biggest impact on middle-class Americans.
A report by the Center on Budget and Policy Priorities, a left-leaning think tank, estimates that eliminating all of Trump’s proposed corporate tax increases could raise an additional $2.6 billion a year.
Many middle-income households