Tags: house | corporate | tax | cut | five years

House Said to Consider 5-Year Phase-in for Corporate Tax Cut

House Said to Consider 5-Year Phase-in for Corporate Tax Cut
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Monday, 30 October 2017 03:19 PM

House tax writers are discussing a gradual phase-in for the corporate tax-rate cut that President Donald Trump and Republican leaders want -- a schedule that would have the rate reach 20 percent in 2022, according to a member of the chamber’s tax-writing committee and a person familiar with the discussions.

The phase-in plan has been considered, but may not yet be final, said a member of the House Ways and Means Committee, who asked not to be named because the discussions are private. Under that plan, the rate may be reduced from its current 35 percent rate by three percentage points a year starting in 2018. 

U.S. stocks fell to session lows and Treasuries pushed higher on the news.

The Ways and Means panel plans to release the text of a bill on Wednesday, ending a secretive drafting process that has had corporate lobbyists on edge. The broad framework that Trump and congressional Republican leaders released last month called for the 20 percent corporate rate as one of several tax-rate cuts for businesses and individuals.

“The president laid out his principles and it doesn’t include the phasing in, so we’re still committed to that moving forward,” White House Press Secretary Sarah Huckabee Sanders said during a press briefing Monday. “I don’t have any reason to believe we have changes on that front at this point.”

Treasury Secretary Steven Mnuchin reiterated that stance during an interview while traveling in the Middle East. “The objective is not to have that phase in, but we will see how that goes,” Mnuchin said.

A spokeswoman for the Ways and Means committee didn’t immediately respond to a request for comment.

Economic Arguments

Ways and Means members said they expected to discuss the phasing in proposal Monday afternoon. Two GOP members of the panel -- Representative David Schweikert of Arizona and Representative Devin Nunes of California -- said they wanted to see how the math worked out before taking a position.

The corporate cut was estimated to cost $1.6 trillion over a decade, according to estimates from the Tax Foundation, a Washington policy group -- but it would be less costly under a phased-in schedule. Under budget rules Republican leaders have said they plan to follow, tax cuts that aren’t offset with enough revenue-enhancing provisions to avoid adding to the long-term deficit would have to expire.

Trump had argued for cutting the corporate rate to 15 percent -- though in September as the GOP framework emerged, he quickly embraced the 20 percent target, calling it “a perfect number.”

His White House has since argued that cutting the rate to 20 percent would speed up economic growth enough to eventually make the U.S. economy 3 to 5 percent larger than it otherwise would be. That analysis, by Trump’s Council of Economic Advisers, has also found that cutting the corporate rate would increase average household income by at least $4,000. Other economists have questioned that claim.

A possible phase-in for the corporate rate has been rumored for weeks, according to two people close to the debate who asked not to be named. GOP tax writers are looking for ways to limit their bill’s net revenue loss to $1.5 trillion to satisfy the parameters of the budget resolution that the House and Senate have adopted.

Conservative tax lobbyist Ryan Ellis said a proposed phase-in for the corporate rate would be “very disappointing if true.” He said it would “delay business allocation of capital by the same five years.”

Some anti-tax activists, including Grover Norquist, the head of Americans for Tax Reform, have urged Republicans to frontload the tax cuts in order to deliver economic benefits immediately. They say that delaying them would mean Republicans couldn’t tout them by the 2018 midterm elections.

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House tax writers are discussing a gradual phase-in for the corporate tax-rate cut that President Donald Trump and Republican leaders want -- a schedule that would have the rate reach 20 percent in 2022, according to a member of the chamber's tax-writing committee and a...
house, corporate, tax, cut, five years
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2017-19-30
Monday, 30 October 2017 03:19 PM
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