While the Trump administration works with lawmakers to put its tax reform ideas into action, Britain’s Theresa May said Wednesday she is seeking to cut the country’s corporate rate again, potentially leapfrogging the U.S. once more.
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May told parliament she would continue to slash the country’s business tax rate – which currently stands at 20 percent – in order to promote job growth and attract investment opportunities as the country follows through on its plan to exit the European Union.
"If we're going to grasp the opportunities as we leave the European Union, we need to build a stronger economy … we will encourage businesses to grow and create jobs by continuing to cut corporation tax,” May said.
Britain has lowered its corporate tax rate substantially in recent years and is well ahead of the U.S. on many accounts where tax reform is concerned. While the U.S. fights to leave its worldwide taxation system behind, the U.K. already uses a territorial taxation system. Through a number of cuts, Britain has lowered its business rate from 30 percent to 20 percent over the last decade. Now May has committed to dropping that tax rate even further, while the United States struggles to reach a consensus on slashing its 35 percent corporate tax.
The Trump administration has said reforming the business tax code is a priority in order to level the playing field for American businesses. White House officials have said lowering the rate will bring trillions of dollars back into the country by discouraging corporate inversions and outsourcing, thereby promoting economic growth. President Trump is pushing for the biggest cut to the corporate tax rate in U.S. history: the blueprint laid out by Treasury Secretary Steven Mnuchin and National Economic Director Gary Cohn in April calls for slashing the rate by 20 percentage points to 15 percent.
“In 2017 we are still stuck with a 1988 corporate tax. That’s why we are one of the least competitive countries in the corporate world when it comes to the corporate tax,” Cohn said while revealing the tax overhaul outline.
Meanwhile, the administration says it is working daily on producing a bill to put before Congress and insists tax reform will get done this year. While many agree the United States needs to lower its corporate tax rate, the 15 percent target may not pass Congressional muster. The House GOP plan called for a rate of 20 percent and many lawmakers have cited concerns over how the entire proposal will be financed.