Trump adviser seeks swift solution to business taxes

AN economist who helped write Donald Trump’s tax proposals floated a plan for Congress to tackle business taxes — including a rate cut on companies’ overseas earnings — quickly next year, while postponing consideration of individual income taxes.

That strategy, offered by Stephen Moore, an economist who has advised Trump, has at least some political risk; throughout his campaign the president-elect generally pitched his tax plans as “a massive tax reduction” for working and middle-income Americans.

But focusing on business taxation first might allow for moving a bill much faster — and win support from Senate Democrats, who want to use short-term revenue gains from an offshore tax break to fund nationwide infrastructure improvements.

“I would label this a jobs bill. I think the economy is extremely weak right now. I think we could be headed toward recession in 2017, and we need some kind of anti-recession insurance policy,” said Moore.

A business tax bill would include a tax cut for US companies’ offshore earnings. Under current law, that income is taxed at a 35 per cent rate — but companies can defer paying those taxes until they bring those earnings back to the US. As a consequence, US companies have accumulated as much as US$2.6 trillion (RM11.4 trillion) in offshore profit.

Offering a lower rate — Trump has proposed 10 per cent, while House Republicans have proposed 8.75 per cent or lower — would provide a tax cut and a short-term revenue boost at the same time. Bloomberg

SHORT-TERM GAINS: Plan includes rate cut on companies’ overseas earnings