GOP's latest tax plan: Tax cuts for the richest, tax hikes for the poorest

Trump's tax plan will reduce the number of brackets and slash corporate tax rates — but raise the bottom tax rate

Published September 26, 2017 1:05PM (EDT)

 (AP Photo/Evan Vucci)
(AP Photo/Evan Vucci)

As the latest efforts to repeal and replace the Affordable Care Act have turned bleak, Republicans are looking to finally achieve success under President Donald Trump's agenda by passing major tax reform measures that would increase the bottom tax rate, nearly double the standard deduction and slash the top tax bracket as well as the corporate tax rate.

For weeks, GOP leaders have worked in secrecy with two Trump administration officials who were previously employed at top positions for Goldman Sachs: National Economic Council Director Gary Cohn and Treasury Secretary Steven Mnuchin.

The lowest individual tax rate will increase to 12 percent from 10 percent, and the standard deduction will double, according to Axios. Trump will tout the major tax overhaul as a populist "tax cut" on Wednesday; however, Republicans became somewhat worried after getting word that the president wasn't thrilled with the product.

But late Monday night, Republicans close to the process gained confidence "that Trump had come around to supporting the framework — despite his misgivings about the corporate rate not being low enough and about the political risks of raising the lowest rate (even though many more people will now pay no tax because of the increased deduction, meaning they can accurately call it a tax cut for the middle class as well as for the wealthy)," Axios reported.

The number of tax brackets would reduce from seven to three under the new Republican plan. The standard deduction would almost double to $12,000 for a single filer and $24,000 for married couples, which can allow Trump to argue that "many more low income earners would pay no tax under his plan," according to Axios.

The top tax bracket would decrease from 39.6 percent to 35 percent, and the corporate tax rate would be roughly 20 percent, down from the current 35 percent, the Associated Press reported.

Republicans are desperate for a major legislative achievement under the Trump administration, especially after numerous attempts and failures to repeal and replace the current health care law known as Obamacare.

"I think everybody understands that there were certain promises made in the last election, we haven’t gotten there on Obamacare, we damn well better get there on tax,"  Texas Rep. Blake Farenthold told the AP on Tuesday, following a closed-door House GOP caucus meeting.

By Charlie May

MORE FROM Charlie May