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President Donald Trump appears to be on an island when it comes to his desire to fulfill one of his biggest campaign promises.
Since 2015, Trump has advocated that the federal corporate tax rate be slashed to 15% from 35%. The president argued in various campaign and postelection speeches that a 15% rate would make the US more competitive globally, produce more jobs, and kick-start economic growth.
“We’re looking at a 15% rate,” Trump said at a meeting on taxes last Wednesday. “And we want a 15% rate because that would bring us low – not by any means the lowest – but it would bring us to a level where China and other countries are. And we will be able to compete with anybody. Nobody will be able to touch us. So we would like to see 15%.”
While Trump has been insistent on the 15% rate, nearly every other Republican involved in the effort to overhaul the US tax system has said the number is unworkable.
Here’s a quick rundown of what some of the “Big Six” tax writers said on the issue:
- Treasury Secretary Steven Mnuchin: “The president has made it clear since the campaign, ideally he’d like to get it down to 15%. I don’t know if we’ll be able to achieve that given the budget issues, but we’re going to get this down to a very competitive level.” National Economic Council director Gary Cohn: “I would like to get the tax rate as low as possible so that businesses want to create jobs here.” House Speaker Paul Ryan: “I think our goal is to be at or below the industrial world average, and that’s 22.5%. So our goal is to get in the mid- to low 20s.” Senate Finance Committee Chair Orrin Hatch: “The president would like it at 15%. I don’t think we can go that low. But I think there’s a possibility it can go as low as 20%.”
Even a survey of tax professionals conducted by the consulting firm Deloitte’s tax-research arm shows many in the industry are skeptical Trump can meet his target. Just 5.3% of the more than 3,100 people surveyed expect the tax bill to get the corporate rate down to 15%.
The major issue for Republicans in getting the rate that low is the process being used to introduce the bill. The GOP plans to use budget reconciliation so the tax package can be passed in the Senate with a simple majority and bypass a filibuster by Democrats.
To use that process, the bill can’t add to the deficit after 10 years. This means the lower tax revenue from a lower corporate rate needs to be made up by closing deductions or generating revenue in other ways.
At 15%, that math becomes difficult even if Republicans use “dynamic scoring,” a controversial method that assumes increased growth will make up some of the lost revenue.
In a bipartisan tax meeting on Wednesday, Trump suggested that the Republican tax plan may increase taxes on the wealthiest Americans.
“I think the wealthy will be pretty much where they are, pretty much where they are,” Trump said. “If they have to go higher, they’ll go higher.”
Such a concession may allow Republicans to lower the corporate rate further and possibly fulfill the president’s 15% goal. Getting congressional Republicans on board with an increase, however, is highly unlikely.