Former U.S. President Donald Trump’s sweeping tax reform proposal passed a major legislative hurdle on Sunday, as the House Ways and Means Committee voted to advance the bill, signaling strong momentum behind one of the central pillars of Trump’s economic agenda in his return to power.
The legislation, dubbed the “American Growth and Prosperity Act,” aims to make permanent the 2017 tax cuts, reduce corporate tax rates further, and introduce new deductions and credits aimed at encouraging domestic manufacturing and capital investment. It passed the committee largely along party lines, with Republicans hailing it as a pro-growth initiative and Democrats warning of fiscal irresponsibility and benefits skewed toward the wealthy.
“This is a historic step toward revitalizing our economy and putting American families first,” said Rep. Jason Smith (R-MO), chairman of the House Ways and Means Committee. “President Trump made a promise to deliver prosperity for all Americans, and this bill delivers on that promise.”
The proposal seeks to reduce the corporate tax rate from 21% to 17%, expand child tax credits, and extend personal income tax reductions originally set to expire in 2026. It also includes provisions to encourage small business investment and to streamline IRS processes.
Critics, however, argue the plan disproportionately benefits corporations and the top income brackets. Democrats on the committee, led by Rep. Richard Neal (D-MA), opposed the bill and expressed concern over the projected $3.5 trillion it would add to the national debt over the next decade if passed without corresponding spending cuts.
“This is a reckless tax giveaway masked as economic policy,” Neal said. “It will explode the deficit while doing little to help working-class Americans struggling with inflation and healthcare costs.”
Economists remain divided. Supporters say the tax cuts will spur private investment, increase GDP, and drive job creation, while skeptics warn they could worsen inflationary pressures and lead to deeper cuts in social programs.
The bill’s advancement comes amid broader debates about fiscal policy in Washington, particularly after credit agency Moody’s revised the U.S. outlook to “negative” due to mounting deficits and political dysfunction. Treasury Secretary Janet Yellen recently downplayed the downgrade, but acknowledged that long-term tax and spending decisions would need to be addressed.
Trump, who has made the economy a cornerstone of his administration’s second-term agenda, praised the committee’s vote in a social media post. “This is what America needs—strong growth, more jobs, and more money in your pocket. We will MAKE AMERICA PROSPEROUS AGAIN!” he wrote on Truth Social.
The bill is expected to face a full House vote later this week, where Republicans hold a slim majority. If passed, it will move to the Senate, where it faces a tougher battle, especially if Democrats unify in opposition or moderate Republicans raise concerns about the deficit impact.
Meanwhile, public opinion remains mixed. A recent Gallup poll shows that while 53% of Republicans support the tax bill, only 27% of independents and 12% of Democrats back it, reflecting the partisan divide over economic priorities.
For now, the committee vote marks a major political win for Trump and his allies, giving fresh momentum to a legislative package they hope will define his second term. Whether it becomes law will depend on how the fiscal, political, and economic battles play out in the coming weeks.
Source: Reuters
