US deficit set to ‘explode’

Trump pledges to slash corporate tax to 15%, Democrats to oppose

Washington, April 26: The Trump administration pledged on Wednesday to slash corporate rates to 15 per cent as it prepared to unveil a long-awaited reform it touts as the “biggest tax cut” in US history.

“This is going to be the biggest tax cut and the largest tax reform in the history of our country,” treasury secretary Steven Mnuchin said at a discussion about the proposal.

Slashing taxes on income and business was a key part of Donald Trump’s election platform, and the Republican billionaire is seeking to deliver on that pledge as his presidency nears the symbolic 100-day mark this weekend.

Mnuchin was set to outline details of the plan at the White House later Wednesday, but confirmed press reports that “the business tax is going to be 15 per cent”.

He said the administration hopes to push the reform through the Republican-controlled Congress as quickly as possible, but declined to set a deadline.

Trump had initially hoped to drive through tax reform before the summer, but that ambition evaporated amid a failed push to repeal Barack Obama’s signature health care law.

“We’re working hard to get it done quickly,” Mnuchin said. “This is part of his big impact for the first 100 days. We have fundamental agreement on what we’re trying to do and the details of tax reform are still to be worked out.”

The tax plan’s impact on the deficit and debt will be key to winning backing on Capitol Hill.

House Speaker Paul Ryan hailed the reform even though Mnuchin signalled it would not include a tax on imports, something Ryan had lobbied for among fellow Republicans.

The party had been drafting plans for the socalled border adjustment tax for months.

Nevertheless Ryan praised the new plan as “progress”.

“It’s basically along exactly the same lines that we want to go,” Ryan told reporters.

The overhaul is likely to face stiff opposition from Democrats. “I can tell you this: if the President’s plan is to give a massive tax break to the very wealthy in this country, a plan that will mostly benefit people and businesses like President Trump’s, that won’t pass muster with we Democrats,” minority leader Chuck Schumer said on the Senate floor. He also warned that a plan that dramatically shrinks tax revenues would “explode the deficit”.

Analysts have said cutting the top marginal corporate tax rate by 20 percentage points could add a whopping $2 trillion or more to the deficit over a decade.