Senate to Delay Corporate Cut, Defying Trump

The Senate tax bill will delay the corporate rate cut to 20 percent until Jan. 1, 2019, according to Senator Bill Cassidy, a Louisiana Republican. The move would defy President Donald Trump’s insistence that the cut from its current 35 percent rate take effect immediately.

Treasury Secretary Steven Mnuchin said in a Bloomberg TV interview Wednesday that the administration’s “strong preference” is for the relief to start in 2018. Still, Mnuchin declined to say that a phase-in of corporate tax cuts was completely off the table. The House GOP tax bill calls for an immediate corporate cut to 20 percent.

“The longer we wait, the worse it is for the economy and making companies competitive,” Mnuchin said.

U.S. stocks headed for their worst slump since August, with losses widening after reports of the corporate rate delay. Treasuries turned higher and the dollar extended losses.

The Senate bill doesn’t include a measure to repeal the Obamacare mandate that requires individuals to purchase health insurance, Cassidy said. Republicans have been considering including the repeal in tax legislation to help offset the cost of tax cuts. Other Senate GOP members have said the idea is still under consideration.

The Senate plan keeps all seven tax brackets, according to Cassidy. It doesn’t keep the top rate at 39.6 percent, he said. The House bill condenses seven income tax rates to four, with a top rate of 39.6 percent for those earning more than $1 million.

The new top individual tax rate in the Senate bill is to be determined, according to Senator Rob Portman, an Ohio Republican. Asked whether the bill includes a repeal of state and local tax deductions, Portman said that was still being discussed.