Wash. D.C. msn.com
President Donald Trump’s tax plan
to slash the corporate tax rate to 15 percent is setting up a showdown with House Speaker Paul Ryan who has called for a tax plan to pay for itself. Trump intends to lay out broad tax principles , including cutting the federal corporate tax rate to 15 percent from 35 percent, a White House official said. A rate that low would make it difficult to find ways to increase revenue or eliminate deductions to offset it–that means a plan wouldn’t be revenue neutral, or permanent.
The Ryan backed House GOP tax plan released in June calls for replacing the 35 percent rate with a 20 percent rate applied to companies domestic sales and imported goods, while exempting their exports. Ryan has questioned whether a 15 percent rate can realistically be paid for, and he and Kevin Brady, chairman of the tax writing House Ways and means Committee, have said they’re committed to revenue neutrality. The Urban Brookings Tax Policy Center estimates that cutting the corporate rate to 20 percent would lower federal tax revenue by $1.8 trillion over a decade, while cutting it to 15 percent would decrease revenue by $2.4 trillion.
“It’s hard to imagine you’re going to make that revenue neutral,” Roberton Williams, an expert with the Tax Policy Center, said referring to a 15 percent corporate tax. “It’s a big number. The kind of changes you’d need to make to claw that much money back are not consistent with the kinds of things Trump has talked about,” Williams said. “They’d have to do something that raises taxes elsewhere.” If a tax overhaul adds to the deficit after the initial 10 year window, it’s likely to run afoul of Senate budget rules for what can pass the Senate with a simple majority. Republicans have 52 members in the chamber; they can only spare two votes.
Mnuchin indicated that the in this tax plan, the administration is less concerned with tax cuts adding to the deficit. he said the president is “very determined” that the U.S. can achieve sustained annual economic growth of 3 percent or higher, which would pay for the tax cuts along with “trillions of dollars” brought in from offshore havens.