Politics

Trump Wants Corporate Tax Rate Cut To 15%

| by Ray Brown

President Donald Trump said he wants the corporate tax rate reduced to 15 percent -- a significant drop from the current 35 percent rate.

The U.S. currently has one of the highest corporate tax rates in the world, according to the Tax Foundation. Reducing it to 15 percent would make the U.S. corporate tax rate among the lowest of all developed nations, and many in Washington are worried about the potential impact on government revenue.

"I don't know if he can get away with it," said Republican Sen. Orrin Hatch of Utah, chairman of the Finance Committee, according to CNBC.

Treasury Secretary Steve Mnuchin, however, argued that reducing the corporate tax rate to 15 percent would "pay for itself with growth."

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"You could have as high as a $2 trillion difference in revenues depending on what you think is going to be the growth function," Mnuchin said.

The tax cut would be a campaign promise fulfillment for Trump, who made cutting taxes for business owners a cornerstone of his campaign.

It would also be a victory for many people who have advised his campaign and a reports say Mnuchin has been a vigorous supporter of the cut.

"Our analysis has always shown that of all the economic bang for the buck from all of the changes that were in the original Trump plan, you get the most economic juice from cutting the corporate rate," said Stephen Moore, an economist at the Heritage Foundation and former adviser for Trump's campaign, according to The New York Times.

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But Edward Kleinbard, the former chief of staff for Congress’s Joint Committee on Taxation, expressed concern that reducing the corporate tax rate by such a large margin would cost a great deal in revenue.

"The administration has embarked in a very dangerous direction," Kleinbard explained, according to The Washington Post. "If it is going to rely on the principle that tax cuts can pay for themselves, history has demonstrated that tax policies move the growth needle a bit but no more than that."

Critics also fear that, because the proposed cut would result in an approximate 20 percent reduction in taxes for business owners, the rich will benefit more than the poor.

"The proposal would cut taxes at every income level, but high-income taxpayers would receive the biggest cuts, both in dollar terms and as a percentage of income," according to an analysis of Trump's campaign proposal to reduce the corporate tax rate to 15 percent conducted by the Tax Policy Center, according to CNBC.

Sources: The New York Times, CNBC (2), The Washington Post / Photo Credit: Gage Skidmore/Flickr

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