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Donald Trump Unveils Plan To Cut Taxes For Millions

ROBERT SIEGEL, HOST:

In the GOP presidential race, Donald Trump today unveiled the outlines of his tax plan. He wants to sharply cut taxes on individuals and businesses, but he also wants to cap the number of deductions and loopholes that taxpayers can take. Trump says this would give the U.S. economy a much-needed jolt. NPR's Jim Zarroli reports.

JIM ZARROLI, BYLINE: The Trump plan incorporates a lot of ideas that Congress has been batting around for years although they've never gone anywhere. First, Trump wants to address the U.S. corporate tax rate. On paper, it's now the highest in the developed world. Although, many companies are able to lower it through tax credits and deductions. Trump wants to sharply cut the corporate tax rate.

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DONALD TRUMP: No business of any size, from a Fortune 500 company to a mom-and-pop shop to a freelancer living from gig to gig, will pay more than 15 percent of their business income in taxes.

ZARROLI: Trump notes that U.S. corporations don't pay taxes on the money they make in foreign countries until they bring it back into the United States, so they tend to keep it overseas a long time.

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TRUMP: As an example, I have millions of dollars overseas. I can't bring it back into this country. We file papers. We've been doing this for a year and a half. You can't get it back in.

ZARROLI: Even worse, Trump says, the high effective tax rate encourages companies to relocate overseas. If the corporate tax rate is lowered, Trump says, companies will be willing to bring money back home where they can use it to invest and create jobs.

Trump would also make large cuts in personal income taxes. There would be four tax brackets instead of seven. Trump says no individual making less than $25,000 a year would pay income tax. Tax Analyst's Lee Sheppard says that's not as big a deal as it sounds since people in that bracket tend not to pay much in income tax anyway.

LEE SHEPPARD: Ever since George W. Bush did the big tax cut, people in the lower brackets have paid very, very little income tax. They've been almost taken out of the income tax entirely.

ZARROLI: Trump maintains that higher income taxpayers would end up paying more money under his plan because he would cap the number of deductions people can take.

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TRUMP: In other words, it's going to cost me a fortune.

ZARROLI: But Kyle Pomerleau of the Tax Foundation is skeptical about that claim. He says limiting deductions would hurt some rich people, but he says that would be more than offset by the huge cut in top tax rates that Trump is proposing from nearly 40 percent to 25 percent.

KYLE POMERLEAU: Unless there is something he is not telling us, very high-income individuals are going to see a lower tax bill, not a higher tax bill.

ZARROLI: Pomerleau also questions another claim made by Trump. Trump says that by cutting and capping deductions, more and more people would end up having to pay taxes even though their rates would be lower. And as a result, he says, the plan would be revenue neutral. But Pomerleau doesn't buy that.

POMERLEAU: Even though he has some of these base-broadening provisions, his plan is going to substantially increase the deficit.

ZARROLI: And if Trump's plan ever gets that far, it's likely to face concern in Congress about its potential impact on the budget. Likewise, many of the deductions in the tax code are politically very popular, and Trump is likely to find that cutting them is a lot harder than it looks. Jim Zarroli, NPR News, New York. Transcript provided by NPR, Copyright NPR.