Although experts are comparatively optimistic in their forecasts of big tax cuts under the new Republican president, they have absolutely no idea of how all that government revenue would be replaced. As for Trump, his proposals during his candidacy have ranged from the shutting of undetermined business tax ambiguities to declarations that a supply-side tactic, in which tax cuts would generate enough taxable revenue to pay for itself. In spite of that something’s will probably happen.” says Howard Wagner, national tax services managing director for Crowe Horwath, a tax and accounting firm. The Trump campaign proposed a 15% tax rate, which is not far from the House Ways and Means plan which is for a 20% tax rate and with a Republican president, Senate, and House, it is expected that legislation to proceed in a positive manner.
If the tax reform plan of Trump were implemented in their entirety the proposal would slash federal revenue by $4.4 trillion over the next ten or so years on a invariable center under one set of suppositions, or $5.9 trillion under another, according to an analysis of the Trump tax plan by The Tax Foundation, a non-profit tax research organization based in Washington, D.C. The plan would reduce income tax revenue from individuals by $2.2 trillion over the next decade under one of the foundation’s assumptions, or $3.7 trillion under another, according to the analysis. Corporate tax revenue would fall by $1.9 trillion under both sets of assumptions, and the rest of the revenue loss would stem from the repeal of estate and gift taxes that Trump proposes
Trump “has said repetitively that he thinks economic growth will be the engine paying for his proposed rate reductions,” notes Gardner. “So he could go one of two ways: he could double down on his supply-side argument and say great reductions will unleash economic growth which will pay for most if not all of the rate cuts … or he could get real about it and come up with some loophole closers.” Gardner doesn’t have much confidence that he’s going to do the latter because he hasn’t provided much in the way of details about loophole closing. “The cornerstone is this faith that economic growth will pay for it,” he says.
Unfunded tax cuts hypothetically increase the excessive amount that is spent. Paid-for tax cuts generally require tax increases elsewhere to counterbalance the revenue loss. Either way, higher deficits or offsetting tax increases have the prospect of eroding the economic benefits from the rate reduction. That balancing act is what makes tax policy so complicated. LeSage wrote in an email to CFO. Another often-cited way to fund corporate tax cuts might be the closing of so-called corporate “loopholes,” although that term itself is often called into question. “Loophole may not be the right term,” says LeSage. “That implies something accidentally.