House Speaker Paul Ryan has been telling colleagues that the White House plan to cut the corporate tax rate to 15 percent from its current rate of 35 percent is not practicable, FOX Business has learned.
Ryan (R-Wis.), according to congressional aides who spoke on the condition of anonymity, has explained to various House members in recent days that he considers a more reasonable corporate tax rate to fall somewhere between 20 percent and 25 percent because it will have less of an impact on the nation’s budget deficit.
The United States has one of the highest corporate tax rates in the world; many economists believe companies have chosen to domicile in countries where the rate is much lower, such as Ireland, thus depriving the nation of much-needed jobs.
But Ryan, a long-time deficit hawk, believes any tax reform measure of this kind should be mindful of its impact on the budget deficit, currently at $88 billion. While lower corporate taxes should spur economic growth and increase tax revenues in the long run, the immediate impact of cutting rates could widen the deficit before the stimulus of lower taxes kicks in.
A spokeswoman for Ryan did not return calls for comment.
In an interview with the Wall Street Journal, President Donald Trump on Tuesday reiterated his desire to bring the corporate rate down to 15 percent -- a move he believes will create jobs for the middle class. He said his tax plan may also force higher-income people to pay more income taxes through closing of loopholes, while the middle class enjoys a tax cut.
“The people I care most about are the middle-income people in this country, who have gotten screwed. And if there’s upward revision it’s going to be on high-income people,” Trump said.
It’s unclear how much of a tax increase the wealthiest Americans, could be hit with in the Trump tax plan.
A White House spokeswoman did not return emails for comment.
Steve Moore, a distinguished visiting fellow at The Heritage Foundation and an outside adviser for the Trump administration on tax reform, tells FOX Business that despite Ryan’s comments, economic advisers inside the Trump White House are still pushing for the corporate tax rate to be cut to 15 percent.
“I think it’s been Paul Ryan saying that we can’t make that big of a cut but I believe President Trump and the White House will be pushing ahead with a 15 percent cut,” Moore said.
Moore and conservative economist Larry Kudlow created a tax plan of their own during the 2016 presidential campaign that then-candidate Trump used as a blueprint for his own tax reform agenda.
Still, Ryan as House Speaker, is a major player in tax reform negotiations. He’s a member of what’s known on Capitol Hill as the “big six” tax group who have been meeting every week since the start of the new Congress to discuss how to reform the tax code while determining cuts to the individual and corporations.
The group also includes Chairman of the House Ways and Means Committee Kevin Brady (R-Texas), Senate Leader Mitch McConnell (R-Ky.), Senator Orrin Hatch (R-Utah), as well as National Economic Council Director Gary Cohn and Treasury Secretary Steven Mnuchin.
Earlier this month, Hatch echoed Ryan’s uncertainty about being able to cut the corporate tax rate to 15 percent in an interview with FOX Business, saying that while it would be wonderful if the federal corporate tax rate could be lowered to 15 percent, comprise might be needed. “I think the President has probably come off of that particular figure” he said adding that a corporate tax rate between 20 percent and 25 percent would turn the U.S. economy around overnight.
Meanwhile, according to Politico, the group is expected to release a broad brush tax reform plan on Friday before Congress leaves for its August recess. It’s expected to be more of a messaging document versus a detailed policy proposal and is meant to present a unified front on tax reform between the White House and Republican Congressional leaders.