13 06 2017

US 2018 Budget Says Tax Reform To Be Deficit-Neutral

The Trump Administration's first full budget reaffirms the tax reform proposals put forward by the President's team last month and indicates that a reform package will be deficit-neutral.

The Budget blueprint sets out the spending commitments and revenue projections for the fiscal year 2018. It also broadly sets out policies that underpin the projections, including those for tax reform, which the administration estimates will not add to the deficit, despite studies that point to the contrary.

The Budget sets out the key measures of "a comprehensive overhaul of [the] tax code" as envisaged by the Trump Administration. It talks of lower rates for individuals and businesses, although it does not specifically mention a headline 15 percent corporate tax rate.

The Budget says the US would "eliminate most special interest tax breaks," repeal the alternative minimum tax, abolish Estate Tax, and adopt a territorial tax system. The transition to this would see a one-time repatriation tax on accumulated overseas profits. It also reaffirms Republicans' objective of repealing Obamacare and associated taxes, such as the 3.8 percent surcharge on capital gains and dividends.

The document also reiterates the intention to "expand the standard deduction" as part of a raft of policies delivering "tax relief for American families – especially middle-income families."