Sen. Orrin Hatch (R-Utah) will hit the ground running this week as he lays the groundwork for broad tax reform FOX Business has learned, and he is expected to use the sky-high corporate tax rate to make his case. At 35%, the U.S. corporate tax rate is the highest among developed nations which critics argue is hurting America’s global competitiveness.
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Although President Trump has advocated to lowering the rate to around 15%, Hatch, who is chairman of the Senate Finance Committee told FOX Business correspondent Adam Shapiro last month in an exclusive interview, the rate will likely end up being higher.
“I think the President has probably come off of that particular figure” said Hatch, adding that a corporate tax rate between 20% and 25% would turn the U.S. economy around overnight.
The White House plans to have a tax reform draft “locked in place” before the August recess, which is scheduled to begin when Congress leaves on July 28, said White House Director of Legislative Affairs Marc Short, during a briefing on Monday. Previously, Treasury Secretary Mnuchin has suggested it would be ready in September. However, the big question is yet to be answered: how to pay for it.
House Ways and Means Committee Chairman Rep. Kevin Brady (R-Texas) wants to cut taxes, but pay for those cuts with a border adjustment tax that critics say will raise prices for everyday goods consumers buy at places like Walmart (WMT) and Target (TGT). Hatch is opposed to the border adjustment tax, but says he will consider it if Brady can make a case for its inclusion in tax reform.
As reported by FOX Business, the Senate Finance Committee oversees more than 50 percent of the federal budget and has jurisdiction over tax, trade and health care policy. As Chairman, Senator Hatch wields a great deal of power in Congress. The tax reform bill will be written by the House, but still has to pass through Hatch’s committee in order to survive. The administration has said it won’t push for the bill to be introduced in the House of Representatives until both committees, House Ways and Means and Senate Finance, are in agreement on the details.
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One provision made public when the administration proposed its tax reform outline are the three proposed income tax rates of 10%, 25% and 35%. Democrats call the administration’s tax reform plan a giveaway for the rich. But Hatch says the top 10% of income earners in the United States who pay roughly 68% of all federal income taxes, will not get a tax cut. Their tax rate may fall but Congress is considering eliminating most deductions like those for state and local taxes which will offset any gains from changing tax rates and income brackets.