In a speech yesterday in Indiana, Trump said he was announcing ‘a framework to deliver historic tax relief to the American people’.

Trump said: ‘This is a once-in-a-generation opportunity, and I guess it's probably something I can say that I'm very good at. I've been waiting for this for a long time. We're going to cut taxes for the middle class, make the tax code simpler and more fair for everyday Americans, and we are going to bring back the jobs and wealth that have left our country — and most people thought left our country for good.

‘We want tax reform that is pro-growth, pro-jobs, pro-worker, pro-family, and, yes, tax reform that is pro-American.’

The president said his new framework is based on four key ideas. The first is tax cuts for ‘everyday, hardworking Americans’. Under the new plans the first $12,000 (£8,963) of income earned by a single individual will be tax free, and a married couple will not pay any taxes on their first $24,000 (£17,927) of income.  

Trump also intends to simplify the tax code with three tax rates of 12%, 25%, and 35%. There will be an increased child tax credit for children under the age of 17, with wider eligibility rules, and a new $500 tax credit for elderly and other adult dependents.

‘Our framework includes our explicit commitment that tax reform will protect low-income and middle-income households, not the wealthy and well-connected,’ Trump said. He announced the eliminated of ‘most itemised deductions that primarily benefit the wealthiest taxpayers’ although gave no details.

The second plank of his policy is to make the tax code simple, fair, and easy to understand.

Trump said: ‘Americans waste so much money — billions and billions of dollars and many hours each year to comply with our ridiculously complex tax code. More than 90% of Americans use assistance to prepare their taxes. Under our framework, the vast majority of families will be able to file their taxes on a single sheet of paper.’

In addition, the president announced the repeal of the alternative minimum tax (AMT), which he said was used to create a ‘shadow’ tax system that requires many people to calculate their taxes two different ways and pay the higher of the two amounts. 

Trump is also repealing the US estate tax, saying ‘that death tax is a disaster for this country’.

Thirdly, Trump pledged to cut taxes on American businesses ‘to restore our competitive edge and create more jobs and higher wages for American workers’. This includes slashing the corporation tax rate to no more than 20%.

‘Today, our total business tax rate is 60% higher than our average foreign competitor in the developed world.  

‘Under our framework, we will dramatically cut the business tax rate so that American companies and American workers can beat our foreign competitors and start winning again.’

For sole proprietors, corporations and partnerships, the tax rate will be capped at 25%, which Trump said marked ‘the lowest top marginal income tax rate for small- and mid-size businesses in this country in more than 80 years.’

In addition, the president said for the next five years, the new tax framework will allow businesses to fully write off the cost of equipment in the year in which they buy it, rather than over a longer period, as a way of encouraging investment in equipment.

The final plank of the Trump tax plan centres on his plans to offer a one-time low tax rate for US multinationals on returning money that is currently held offshore.

Trump said: ‘Our current tax system makes us one of the few developed nations in the world to punish our companies when they bring wealth earned overseas back into our country. We're punishing them for bringing the money back in.

‘As a result, corporations have parked many trillions of dollars in foreign countries, and many have incorporated abroad in order to avoid our punitive tax system altogether. And some companies actually leave our country because they have so much money overseas — so much, it’s an incredible amount — that they move the company to get their money. We're going to let them bring the money back home.’

Trump’s speech did not contain new specifics on his plans, and he has still to outline how he will win the necessary approval from Democrat members of Congress to get the necessary legislation passed.

The president concluded his speech by saying: ‘I look forward to working with Congress to deliver these historic tax cuts and reforms to the American people. These tax cuts are significant. There's never been tax cuts like what we're talking about.’

Report by Pat Sweet