I.M.F. Cautions Against Tax Cuts for Wealthy as Republicans Consider Them
President Trump’s agenda in many ways defies those recommendations. He championed several bills in Congress this year that would have reduced federal spending on health care, though none of them passed the Senate.
And while Mr. Trump’s first budget proposal promised to reduce federal deficits and debt, his administration is pushing a tax plan that independent analysts warn could add trillions to the deficit over the next decade, depending on how Republicans fill in crucial details that party leaders have so far declined to specify.
Perhaps most importantly, the framework tax plan includes several measures that analysts say would amount to windfalls for wealthy Americans, even though Mr. Trump has said the wealthy will not benefit from the plan.
The framework released last month would reduce the top income tax rate on individuals to 35 percent, from 39.6 percent today, while leaving open the possibility of levying a higher top rate on top income earners. It would repeal the estate tax, which currently affects only individuals’ estates valued at more than $5.49 million. And it would reduce taxes on so-called pass-through entities — businesses whose owners currently pay federal income taxes on their profits.
Republican leaders are working to ensure the plan does not raise taxes on the poor or the middle class, but details remain to be seen.
An analysis of the framework proposal by the Tax Policy Center in Washington, which made some assumptions about the unspecified details in the Republican plan, found that the gains from the proposal would be heavily concentrated among the very rich.
Maurice Obstfeld, the International Monetary Fund’s chief economist, said the fund was waiting to see the details of the plan but said it should generate revenue rather than increase the deficit, which would help the United States invest in infrastructure and assist its aging population.