The Donald Trump Administration, together with U.S. Congress Republicans on Wednesday released a unified framework for tax code reform, which will cut tax rates for businesses and individuals while lacks details on how to consolidate fiscal position in face of big tax cuts.
Under the framework, individuals will see tax rates reduced from current seven tax brackets to three brackets: 12 percent, 25 percent and 35 percent, and their standard nearly deduction doubled.
The framework will increase the Child Tax Credit and eliminate all personal exemptions and itemized deductions.
As for business tax reform, the framework will reduce corporate tax rate to 20 percent from currently 35 percent. Pass-through businesses, such as sole proprietorships, partnerships and S corporations will see their tax rate down to 25 percent.
In order to bring U.S. businesses back home, the framework will adopt territorial taxation approach toward global American companies and replace the existing worldwide tax system.
It will tax the foreign profits of U.S. multinational corporations at a reduced rate in order to prevent companies from shifting profits to tax havens.
"This framework will deliver a 21st century tax code that is built for growth, supports middle-class families, defends our workers, protects our jobs, and puts America first," said the Treasury Department in a statement on Wednesday.
The White House and congressional Republicans did not give an estimate on how much the tax plan would cost.
The framework also lacks details on how to make up the big tax cuts in order to keep a solid fiscal position, while Trump administration and the Republicans insisted that the reform would boost economy and make up the fiscal losses due to the big tax cuts.
"It will deliver fiscally responsible tax reform by broadening the tax base, closing loopholes and growing the economy," the Treasury Department said in the statement.
The framework serves as a template for the tax-writing committees in the Congress. The House Committee on Ways and Means and the Senate Committee on Finance will develop legislation on the basis of the framework.
While the White House and Congressional Republicans said they welcomed and encouraged bipartisan support and participation in the tax reforms, the framework is unlikely to receive support from Congressional Democrats who considered the tax reforms would give large tax cuts for the wealthiest.