Trump's big tax cut 2.0 plan at a glance: corporate tax reduced to 15%, economic growth in exchange for tax cuts, fiscal deficit becomes the focus

US Treasury Secretary Scott Bessent detailed the 'Tax Cut 2.0' plan promoted by the Trump administration during an interview this morning on 3/7, emphasizing that the plan will drop corporate taxes, tips, and overtime pay from taxation, and permanently implement some tax reduction measures, with the goal of enhancing the competitiveness of the US economy and preventing the $5 trillion tax hike effect caused by the expiration of the 2017 tax reform measures.

Bessent also emphasized that the government will fill the fiscal gap after the tax cut by increasing tariff revenue and cutting federal spending, but there are concerns that this move may lead to a widening of the US fiscal deficit and trigger more economic uncertainty.

Corporate tax drops to 15%, low-wage workers receive tax relief benefits

Bessent said that the tax reduction plan of the Trump administration was designed by a team of six giants, including the Department of the Treasury, the National Economic Council (NEC), and congressional leaders, aiming to maintain GDP growth of over 3% in the U.S. economy for the next 10 to 20 years. The following are the main tax reduction measures:

Corporate tax reduced to 15%: allowing American companies to have more funds for continued development and to enhance competitiveness.

Tips, overtime pay exempt from tax: increase disposable income for the service industry and low-wage workers.

Social Security Benefits (: Reduce the tax burden on retirees by exempting them from taxes.

'Made in the USA' products 15% tax rate: Encouraging companies to return production to the USA.

Bessent emphasizes: 'This is not just a tax cut, but making these tax reduction measures permanent to ensure that businesses and individuals can benefit in the long term, eliminating economic uncertainty.'

Tariffs serve as a fiscal subsidy tool, with Chinese tariff revenue filling the tax reduction gap

To ensure government revenue, Bessent mentioned the Trump administration's 'tariffs and tax cuts' strategy, believing that tariffs can be imposed on countries such as China, Mexico, India, etc., to fill the fiscal gap, and the tariff revenue can be used to subsidize low-wage workers. Here is the tariff strategy of the Trump administration:

Increase tariffs on imported goods from China to increase US fiscal revenue.

Use tariff revenue to subsidize tax-free tips and overtime pay policies.

Reducing the reliance on imported goods from the United States encourages companies to return.

However, this approach has also raised concerns from the outside world:

Tariffs may raise prices, leading to an increase in the cost of living for American consumers.

A trade war could lead to higher supply chain costs for American companies.

International allies may impose retaliatory tariffs, affecting US exports.

Bessent acknowledges that tariff policies may cause short-term pain, but emphasizes that in the long run, the United States will become the most competitive economy globally.

The government continues to reduce federal employees and promote the development of the private sector.

Bessent also revealed that the Trump administration plans to reduce the fiscal deficit by cutting federal government spending and shifting more economic activity to the private sector. Here are the directions of the Trump administration reform:

Reduce federal employees to cut administrative costs.

Reduce government subsidies and plans to drop the financial burden.

Encourage corporate investment, create more private employment opportunities.

He emphasized, "We want the market to lead the economy, not government intervention." However, this plan has also sparked controversy, such as whether government layoffs will affect the quality of public services, and whether cutting subsidies will increase the burden on low-income groups.

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Fiscal deficit risk, can economic growth support tax reduction

Bessent frankly stated that if the US economic growth does not reach 3%, the reduction in tax revenue may exacerbate the fiscal deficit issue. According to the evaluation of the Congressional Budget Office (CBO) ).

Assuming the tax reduction plan is passed, the US fiscal deficit could increase by 3 trillion dollars over the next 10 years.

If the GDP growth rate fails to meet the target, the government's fiscal pressure will intensify.

The current US government debt has reached $34 trillion and may continue to rise in the future.

Bessent rebuts: 'If we can maintain economic growth of more than 3%, these tax reduction policies will be self-sufficient and will not burden the government with more debt.' However, many economists are concerned that this 'tax reduction in exchange for growth' strategy is too optimistic, and the uncertainty of the global economic environment may affect the momentum of economic growth in the United States.

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Can the Trump administration successfully achieve tax cuts without increasing the deficit

The 'big tax cut 2.0' plan this time is an important policy of the Trump administration trying to strengthen the competitiveness of the U.S. economy, attract businesses back, and increase workers' income. However, there are still many variables as to whether this plan can be implemented smoothly:

Can the US economy maintain a growth rate of 3% or above?

Is the tariff revenue sufficient to support the fiscal deficit after the tax reduction?

Will government spending cuts affect public services and social stability?

Bessent emphasizes: 'This is a crucial moment for the US economy, if we do not take action, we will face a terrifying $5 trillion tax burden in the future.'

However, there is still a fierce debate within the US Congress on whether to further reduce taxes. Some lawmakers are concerned that this will worsen the US fiscal situation and may affect future economic stability. In the coming months, Congressional decisions will be key to the success or failure of this tax reform.

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This article Trump's major tax reduction 2.0 plan at a glance: corporate tax drops to 15%, economic growth in exchange for tax reduction, fiscal deficit becomes the focus first appeared in Chain News ABMedia.