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Donald Trump proposes eliminating U.S. federal income tax for millions

Republican presidential front-runner Donald Trump on Monday proposed eliminating income taxes for millions of Americans, and lower rates for the highest-income earners, as part of a plan he said would grow the U.S. economy at a pace not seen in years.

Trump also says his own plan will cost him 'a fortune' by eliminating tax loophole

Republican presidential candidate Donald Trump is calling for an overhaul of the U.S. tax code that would eliminate income taxes for millions of Americans, while lowering them for the highest-income earners and businesses. (The Associated Press)

Republican presidential front-runner Donald Trump on Monday proposed eliminating income taxes for millions of Americans, and lower rates for the highest-income earners, as part of a plan he said would grow the U.S. economy at a pace not seen in years.

His tax plan is the only the third major policy proposal from Trump, who has also outlined plans for immigration and guns. He has been criticized for failing to unveil specific policy proposals as he's risen to the top in early preference polling nationwide and in early voting states. But polls taken after the second Republican presidential debate on Sept. 16 show retired neurosurgeon Ben Carson narrowing the gap with Trump.

Trump's plan for an overhaul of the U.S. tax code would eliminate federal income taxes on individuals earning less than $25,000 US and married couples earning less than $50,000. He said those individuals would receive "a new one page form to send the IRS saying, `I win."'

Trump's plan would also disproportionately benefit wealthy earners by lowering the highest income tax rate from 39.6 percent to 25 percent, and businesses by cutting their tax rate — from major corporations to mom-and-pop shops — to no more than 15 percent.

"There will be a major tax reduction," Trump said at a news conference at his Trump Tower skyscraper in Manhattan. "It'll simplify the tax code. It'll grow the American economy at a level that it hasn't seen for decades."

'Going to cost me a fortune'

Trump said he wants to eliminate the so-called "carried interest loophole" that allows managers of hedge funds and private equity firms to pay a lower tax rate than most individuals, and would reduce or eliminate most deductions and loopholes for both individuals and corporations. "In other words, it's going to cost me a fortune," he said.

The billionaire real estate mogul said those changes would pay for the tax cuts, along with an increase in tax revenue generated by economic growth. Trump estimated that his plan would lead the economy to grow at least three per cent a year, and as much as five or six per cent — a rate of growth that most economists say is unrealistic.

Trump said his plan would also bring in new sources of revenue to the Treasury by allowing corporations to bring money held in overseas accounts back to the United States after paying a one-time tax of 10 per cent. He would also prevent companies from deferring taxes paid on income earned abroad.

In sum, he said, the changes he wants to enact would not add to the annual federal budget deficit or the national debt.

Trump said the plan had been crafted with the help of leading economists, but refused to say who they were during his news conference.

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