GOP, White House eye deep cuts to corporate tax rate

The grand plan to rewrite the nation’s tax code would be the first major overhaul in three decades.

  • By MARCY GORDON and KEN THOMAS Associated Press
  • Monday, September 25, 2017 3:38pm
  • Business

By Marcy Gordon and Ken Thomas / Associated Press

WASHINGTON — The White House and congressional Republicans are finalizing a tax plan that would slash the corporate rate while likely reducing the levy for the wealthiest Americans, with President Donald Trump ready to roll out the policy proposal at midweek.

The grand plan to rewrite the nation’s tax code would be the first major overhaul in three decades, delivering on a Trump campaign pledge and providing a sorely needed legislative achievement. It also is expected to eliminate or reduce some tax breaks and deductions.

The plan would likely cut the tax rate for the wealthiest Americans, now at 39.6 percent, to 35 percent, people familiar with the plan said Monday. They spoke on condition of anonymity ahead of a formal announcement.

In addition, the top tax for corporations would be reduced to around 20 percent from the current 35 percent, they said. It will seek to simply the tax system by reducing the number of income tax brackets from seven to three.

Trump has said he wanted to see a 15 percent rate for corporations, but House Speaker Paul Ryan has called that impractically low and risking adding to the soaring $20 trillion national debt.

The White House and congressional leaders planned an all-out blitz later this week to build support for the plan, which is now Trump’s top legislative priority as the GOP has struggled to repeal and replace Democrat Barack Obama’s health care law. The political stakes are high for Trump, who has promised to bring 3 percent economic growth and expanded jobs through tax cuts.

The plan being assembled lays out “pro-growth tax reform,” Rep. Kevin Brady, R-Texas, head of the tax-writing House Ways and Means Committee, told reporters on Capitol Hill. It will fix a tax code that is “so complex, so costly and so unfair,” he said.

Details will be filled in later by the committee, and legislation will be put forward after the House and Senate enact their budget frameworks, Brady said.

Republicans are divided over the potential elimination of some of the deductions, underscoring the difficulty of overhauling the tax code even with GOP control of the House and Senate.

House Republicans planned to hold a Wednesday retreat at Fort McNair, Maryland, a few miles from the White House, to discuss the proposal, with briefings led by Brady and Rep. Peter Roskam, R-Ill.

Trump planned to address the plan in a speech the same day at the Indiana State Fairgrounds in Indianapolis. Cabinet members and other top administration officials were fanning out on Thursday to talk about the benefits of overhauling the tax system.

“The tax reform I think is very critical and he knows that,” said Christopher Ruddy, the CEO of NewsMax and a longtime Trump friend. “And that’s why he’ll push really hard for it. But he’s got something big going for him here. The Republicans need to run on something next year and it’s tax cuts. So even if they don’t want to be particularly helpful to him, I think they’re going to give him this. If he has the tax cuts signed, I think it’s going to be very helpful for him.”

Touching with his conservative base, Trump planned to discuss the tax plan at dinner Monday night with representatives of several conservative, religious and anti-abortion groups.

Republicans control Congress but they are split on some core tax issues. They’re in agreement on wanting to cut tax rates and simplify the byzantine tax system but they’re divided over whether to add to the government’s ballooning debt with tax cuts. The GOP also is at odds over eliminating the federal deduction for state and local taxes.

That deduction is prominently in the sights of the plan’s architects. Treasury Secretary Steven Mnuchin says the administration wants to eliminate or reduce it because the federal government shouldn’t be subsidizing states and wealthy households. Nearly 44 million people claimed the deduction for state and local taxes in 2014, according to the most recent IRS tally, especially in the high-tax, high-income states of California, New York, New Jersey and Connecticut.

Politics figure heavily. There are a host of GOP lawmakers in those four Democratic-controlled “blue” states — including prominent members like House Majority Leader Kevin McCarthy of California. A number of them are pushing back.

Regardless of what the administration and the House GOP come up with on taxes, Sen. Orrin Hatch, the Utah Republican who heads the tax-writing Senate Finance Committee, has warned that his panel won’t be “a rubber stamp” for the plan.

Republican senators on opposing sides of the deficit debate have tentatively agreed on a plan for $1.5 trillion in tax cuts. That would add substantially to the debt and would enable deeper cuts to tax rates than would be allowed if Republicans followed through on earlier promises that their tax overhaul wouldn’t add to the budget deficit. That would mark an about-face for top congressional Republicans like Ryan and Senate Majority Leader Mitch McConnell, who had for months promised it wouldn’t add to the deficit.

Talk to us

> Give us your news tips.

> Send us a letter to the editor.

> More Herald contact information.

More in Business

Paul Roberts makes a speech after winning the Chair’s Legacy Award on Tuesday, April 22, 2025 in Tulalip, Washington. (Olivia Vanni / The Herald)
Paul Roberts: An advocate for environmental causes

Roberts is the winner of the newly established Chair’s Legacy Award from Economic Alliance Snohomish County.

Mel Sheldon makes a speech after winning the Elson S. Floyd Award on Tuesday, April 22, 2025 in Tulalip, Washington. (Olivia Vanni / The Herald)
Mel Sheldon: Coming up big for the Tulalip Tribes

Mel Sheldon is the winner of the Elson S. Floyd Award from Economic Alliance Snohomish County

Dave Somers makes a speech after winning the Henry M. Jackson Award on Tuesday, April 22, 2025 in Tulalip, Washington. (Olivia Vanni / The Herald)
County Executive Dave Somers: ‘It’s working together’

Somers is the recipient of the Henry M. Jackson Award from Economic Alliance Snohomish County.

Laaysa Chintamani speaks after winning on Tuesday, April 22, 2025 in Tulalip, Washington. (Olivia Vanni / The Herald)
Laasya Chintamani: ‘I always loved science and wanted to help people’

Chintamani is the recipient of the Washington STEM Rising Star Award.

The Coastal Community Bank branch in Woodinville. (Contributed photo)
Top banks serving Snohomish County with excellence

A closer look at three financial institutions known for trust, service, and stability.

Image from Erickson Furniture website
From couch to coffee table — Local favorites await

Style your space with the county’s top picks for furniture and flair.

2025 Emerging Leader winner Samantha Love becomes emotional after receiving her award on Tuesday, April 8, 2025 in Everett, Washington. (Olivia Vanni / The Herald)
Samantha Love named 2025 Emerging Leader for Snohomish County

It was the 10th year that The Herald Business Journal highlights the best and brightest of Snohomish County.

2025 Emerging Leader Tracy Nguyen (Olivia Vanni / The Herald)
Tracy Nguyen: Giving back in her professional and personal life

The marketing director for Mountain Pacific Bank is the chair for “Girls on the Run.”

2025 Emerging Leader Kellie Lewis (Olivia Vanni / The Herald)
Kellie Lewis: Bringing community helpers together

Edmonds Food Bank’s marketing and communications director fosters connections to help others.

2025 Emerging Leader Christina Strand (Olivia Vanni / The Herald)
Christina Strand: Helping people on the move

Community engagement specialist believes biking, walking and public transit can have a positive impact.

2025 Emerging Leader Melinda Cervantes (Olivia Vanni / The Herald)
Melinda Cervantes: Making sure every voice is heard

Prolific volunteer facilitates connections between Spanish-speaking public representatives and community members.

Support local journalism

If you value local news, make a gift now to support the trusted journalism you get in The Daily Herald. Donations processed in this system are not tax deductible.