US President Donald Trump has introduced biggest tax reform plan in the history of United States. As per the proposals of the new plan, major cuts have been made in the income tax rate. the income tax rates have been slashed from 39.6% to 35%. The new plan has also sharply slashed the business taxes. Steep discounts have been announced on corporate profits that are brought back into the US.
The new plan proposes for a 15% corporate tax rate which is a sharp drop from the existing 35%. In addition, the new reforms aim to move to a territorial tax system that provides relief to both small and large businesses. It is also proposed to repeal the estate tax, the alternative minimum tax. In addition, tax relief will be provided to the families with child and dependent care expenses. Further, the number of tax brackets is expected to be brought down to three from seven.
However, under the US law, only the Congress is empowered to make major changes to the tax laws.
These reforms are hailed as the biggest tax cut and largest tax reform in the history of the United States. According to the economists, the new tax reforms are likely to add trillions of dollars to the deficit over the next decade. As far as India is concerned, the reforms are expected to further push up stock markets which have already responded positively.