- Carlos Barria/Reuters
On February 9, President Donald Trump told manufacturing CEOs during a White House event that he was going to release something “phenomenal in terms of tax” in two or three weeks.
As of April 10, eight and a half weeks later, no tax plan has been released by the White House, and, based on reports, it doesn’t appear to be coming soon.
Since the early days of the campaign, Trump has said he wants to slash corporate taxes to 15% and cut personal tax rates drastically.
But The Associated Press’ Josh Boak and Stephen Ohlemacher report that administration officials have scrapped the outline for tax reform Trump released during the campaign and are writing a new plan.
According to the report, the White House is writing a version of a tax plan rather than signing onto one from congressional lawmakers, as it did with healthcare. The American Health Care Act failed to pass the House last month, and the misstep has left analysts concerned about the future of Trump’s agenda.
The New York Times’ Andrew Ross Sorkin reported on March 28 that administration officials were working off a 20% baseline for corporate taxes and that it may end up as high as 28% – similar to proposals from former President Barack Obama in 2012 and much higher than the 15% Trump promised before the election.
The overhauling of the tax plan appears to have officials doubting their self-imposed deadline for its passage, according to people close to the White House who spoke to the AP. Treasury Secretary Steven Mnuchin told CNBC on February 23 that he wanted the tax plan to be signed by Trump before the August congressional recess.
Other top administration officials have been throwing cold water on the August deadline. Gary Cohn, one of Trump’s top economic advisers and the former Goldman Sachs COO, told Bloomberg TV on Friday that he didn’t know “if it’s August or not” for tax reform.
“Getting it done well and getting it done right is more important than getting it done soon,” Cohn said.
Wall Street has been anxiously awaiting clarity on the issue, as a lower corporate tax rate would boost companies’ profits and help justify the postelection run-up in stock prices.
It appears, however, that investors’ hope for tax reform coming soon has been fading, as companies with a higher tax bill – potentially the biggest winners from a tax cut – have begun to underperform those with a lower tax bill. This indicates investors may not expect a boost to profits from lower taxes imminently.
Trump is also casting a wide net on possible changes to the tax code.
The Washington Post reported on April 4 that the administration was considering a carbon tax and a value-added tax to raise more revenue, both of which are generally not supported by conservatives. Later that day, however, a Trump representative said that “as of now, neither a carbon tax nor a VAT are under consideration.”
The administration is also wrangling with the idea of a border adjustment tax, which is favored by House GOP leaders such as Rep. Kevin Brady, the chairman of the Ways and Means Committee. The BAT would favor exporters and tax importers more heavily, though the exact mechanisms of the tax are still unclear.
This tax, however, has faced pushback from several Republican senators and major retailers. It is questionable whether it would be allowed by the World Trade Organization.