President Trump last week commissioned his staff to draft up a new corporate tax rate of just 15 percent and said it doesn’t necessarily need to be revenue neutral, the Wall Street Journal reported.
Whats more, the president’s aides only have until Wednesday to get it ready and get it right.
But any plan that increases the deficit will be a tough sell to Congress. House Republicans can use a procedural tool known as reconciliation to pass a bill with only 51 votes, but it would have to limit any changes to the deficit to only one decade, effectively making the tax cuts temporary.
The president is expected to meet with cabinet members and top congressional leadership on Tuesday to discuss the tax plan.
A proposed corporate tax rate of 15 percent, drastically lower than the current 35 percent, will come as no surprise to those who listened to Trump on the campaign trail, but it differs from the 20 percent rate floated by congressional Republicans last year. That plan would have covered the cost of the tax cut with new border-adjustment or import taxes. It’s unclear what cost-saving measures, if any, Trump will suggest to ease the squeeze a huge corporate cut will put on the Treasury’s coffers, but they could potentially include closing tax laws beneficial to the real estate industry, such as like-kind exchanges, which the House plan was silent on.
When asked about the tax plan on Monday, Treasury Secretary Steven Mnuchin said it would “pay for itself with economic growth” sparked by a lower-tax environment, but economists who spoke to the Journal doubted that any boost in the economy stemming from such a cut would be enough to cover the revenue losses.
Meanwhile, Democrats are vowing to make tax reform difficult for the president and continue to press him to release his personal tax returns, so the public can see how his proposals might benefit his businesses. “Until President Trump releases his full tax returns, a cloud of suspicion will remain and make it much more difficult to get tax reform legislation through the Congress,” Sen. Chuck Schumer (D-NY) said earlier this month. [WSJ] — Will Parker