President Donald Trump has advised his administration to put deficit concerns on the backburner and work on a plan to slash the corporate tax rate to 15 percent, according to a report Monday from The Wall Street Journal.
President Trump told his staff he wants to deliver on his promise of significant tax reform even if it means the nation loses revenue at the outset, The Journal said.
While Trump has used 15 percent as the baseline for his corporate tax cut pledge, the House GOP leadership initially suggested using 20 percent as the starting point for negotiations. The current business tax rate is 35 percent.
The president and members of his cabinet argue tax reform (i.e. tax cuts) “will pay for itself” through the economic growth they expect it will create. However, a severe decrease in the corporate rate would add to the deficit—at least at the beginning—without the introduction of any off-setting measures. If Trump plans on passing his tax plan through budget reconciliation that is likely to deliver complications. Reconciliation requires only a simple majority of votes, but the legislation cannot increase the deficit over a ten year period. The administration has tried to repeal and replace ObamaCare first because the tax cut from the proposed health care blueprint would’ve provided a more favorable baseline upon which to enact a revenue neutral tax reform plan.
The White House will release a broad overview of its tax reform plan as early as Wednesday, according to administration officials. GOP leadership, including House Speaker Paul Ryan and Senate Majority Leader Mitch McConnell, will meet with cabinet members Tuesday night to discuss details of the impending plan that is expected to include tax cuts for individuals and corporations, as well as a simplification of the tax code.