US President Donald Trump is proposing to slash the corporate income tax rate and offer multinational businesses a steep tax break on overseas profits brought into the United States as Washington struggles with mounting debt.
With financial markets eagerly anticipating a White House tax plan, Trump will also call for a sharp cut in the top rate on pass-through businesses, including many small business partnerships and sole proprietorships, to 15 percent from 39.6 percent, an administration official said.
He will propose cutting the income tax rate paid by public corporations to 15 percent from 35 percent, and allowing multinationals to bring in overseas profits at a tax rate of 10 percent versus 35 percent now, the official said.
Trump’s proposal will not include a controversial “border-adjustment” tax on imports that was in earlier proposals floated by Republicans in the US House of Representatives as a way to offset revenue losses resulting from tax cuts.
Trump’s tax blueprint will fall short of the kind of comprehensive tax reform that Republicans have long discussed, and serve chiefly as a guidepost for lawmakers in the House and Senate.
“We’re driving this a little bit more,” a senior White House official told a group of reporters late on Tuesday.
The plan is not expected by analysts to include any proposals for raising new revenue to offset that lost by the tax cuts, and so, if enacted, it would potentially add billions of dollars to the federal deficit.
Trump sent Treasury Secretary Steve Mnuchin and National Economic Council Director Gary Cohn to Capitol Hill on Tuesday to brief lawmakers on the plan to be unveiled on Wednesday afternoon, likely by Mnuchin.
Mnuchin has been leading the administration’s effort to craft a tax package that can win support in Congress, although the proposals would have a long way to go before becoming law, even with Republicans in control of both the House and Senate.
Mnuchin has said the cuts will pay for themselves by generating more economic growth but fiscal hawks, potentially some in Trump’s own Republican Party, along with Democrats, are certain to question these claims.
Trump also may cap the individual top tax rate at 33 percent, repeal the estate and alternative minimum taxes and cut taxes for the middle class, analysts said.
Whether Trump will include provisions that could attract Democratic votes, such as a proposal to fund infrastructure spending or a child-care tax credit as proposed by his daughter Ivanka, is still the subject of speculation.
Republicans who slammed the growing national debt under Democrat Barack Obama said they are open to Trump’s tax plan, even though it could add trillions of dollars to the deficit over the next decade.
Echoing the White House, Republicans on Capitol Hill argued that tax cuts would spur economic growth, reducing or even eliminating any drop in tax revenue.
The nonpartisan Joint Committee on Taxation said Tuesday that a big cut in corporate taxes — even if it is temporary — would add to long-term budget deficits. This is a problem for Republicans because it means they would need Democratic support in the Senate to pass a tax overhaul that significantly cuts corporate taxes.
Republicans have been working under a budget maneuver that would allow them to pass a tax bill without Democratic support in the Senate — but only if it didn’t add to long-term deficits.