President Donald Trump’s comment last weekend regarding a reduced tax cut for corporations sparkled a debate in the U.S. Congress, with White House personnel trying to reduce the effects of the Trump’s comment.
The two competing tax bills propose reducing the U.S. corporate tax rate to 20 percent, but in other areas they are different, and Republicans are trying to squeeze it into the final legislation.
In an interview, Trump said the anticipated corporate tax rate in the final legislation, “could be 22 (percent) … it could also be 20 (percent)”. The comment got the interest of Republicans who view the increase of the proposed corporate tax rate as generated the needed federal revenue.
On Thursday, White House legislative affairs director Marc Short stated in an interview that Trump was not supporting a higher proposed corporate tax rate, but only articulating the suggestions made by Republican senators.
“I think he was just reflecting what conversations he had heard from them, but that … wasn’t intended to signal: this is an endorsement of raising the corporate rate,” Short said, adding, “We believe that 20 percent is the right number … 20 percent is about as high as we feel comfortable going”.
THE HERALD FINANCE REPORT
Start your workday the right way with the news that matters most.
White House economic adviser Kevin Hassett stated that a 22 percent corporate rate would not weaken the economic boost that Republicans claim the tax cuts will generate.
A comprehensive U.S. tax overhaul would give Trump and Republicans their first major legislative win of 2017 and without a win, losing control of the House and Senate in the 2018 congressional elections is a possibility.
Republicans have considered higher deductions for state and local taxes than the $10,000 property tax deduction included in the House and Senate bills. One version would allow taxpayers to choose a $10,000 deduction for either property or income taxes. House lawmakers want to abolish the corporate alternative minimum tax, which costs roughly $40 billion in revenue over a decade, according to the Joint Committee on Taxation. The Senate held the tax.
Analysts state that a one percentage point change in the corporate rate is equivalent to about $100 billion in revenues over a decade.