Tax framework likely not to call for 15 percent corporate rate: report

The tax framework that key Trump administration officials and GOP leaders are planning to release next week is unlikely to call specifically for a 15 percent corporate tax rate, Politico reported Tuesday.

The framework instead is likely to indicate a corporate rate of 20 percent or less, according to Politico, which cited people familiar with the negotiations.

Republicans all agree that the current 35 percent corporate tax rate should be reduced significantly, but they’ve been divided over how far to cut the rate.

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While President Trump has called for a 15 percent corporate rate, both House Speaker Paul Ryan (R-Wis.) and Treasury Secretary Steven Mnuchin have said in recent days that that rate would be hard to reach. If Republicans want to avoid exploding the deficit, lower rates will need to be offset by eliminating tax preferences and other revenue-raising provisions.

Politico also reported that the framework from the so-called “Big Six” tax negotiators will likely move away from a proposal to allow businesses to immediately deduct the full costs of their investments, known as “full expensing.” Instead, the framework may call for allowing businesses to have accelerated write-offs on a short-term basis.

The tax plan House Republicans released last year called for full expensing, and Sen. Ted Cruz (R-Texas) argued in favor of the idea in a speech last week. But full expensing would be costly, and some businesses would prefer that lawmakers focus on lowering rates.

Americans for Tax Reform President Grover Norquist, who regularly talks with GOP policymakers, said in July that Republicans were debating whether to propose full expensing on a permanent basis or just for three or four years.

A statement that the Big Six released in July called for “unprecedented” capital expensing. When asked about plans on expensing last week, House Ways and Means Committee Chairman Kevin Brady (R-Texas) reiterated that goal.

The Big Six includes Ryan, Mnuchin, Brady, Senate Finance Committee Chairman Orrin Hatch (R-Utah), Senate Majority Leader Mitch McConnell (R-Ky.) and National Economic Council Gary Cohn.