GOP considers corporate tax rate of 22%
WASHINGTON — Leading Republicans are looking at scaling back some of the corporate tax cuts that they are trying to usher into law, two people involved in the tax negotiations said.
The Republicans think they need to find new revenue to make last-minute fixes to the giant package moving through Congress.
The House and Senate passed separate tax-cut packages in recent weeks, and both versions would lower the corporate tax rate from 35 percent to 20 percent. However, GOP negotiators are openly discussing moving that rate up to 22 percent to free up more revenue, people familiar with the discussions said.
The two people spoke on the condition of anonymity because they are not authorized to discuss sensitive negotiations.
The White House has been resistant to making the change to a 22 percent corporate rate, but President Donald Trump said casually on Saturday morning it might be necessary.
Each percentage point that is added back to the corporate rate would generate about $100 billion in revenue over 10 years.
The House and Senate must pass matching tax bills before Trump can sign the package into law. But Republicans want a number of changes that would make the legislation more costly, and the package cannot add more than $1.5 trillion to the debt over 10 years.
One possible change would repeal, or at least severely scale back, an alternative minimum tax for corporations that tries to limit the deductions and credits companies can take.
Another possible major change would allow Americans to deduct up to $10,000 of state income taxes or local property taxes from their taxable income on their federal return. The House and Senate bills would allow Americans to deduct only the property-tax component.
Regarding such a change, Senate Majority Leader Mitch McConnell, R-Ky., told radio host Hugh Hewitt on Wednesday: “That sounds like a kind of reasonable idea.”
Sen. Patrick Toomey, R-Pa., a member of the Senate Finance Committee, cited both of those issues in acknowledging that Republicans are looking for new revenue sources to address lingering concerns.
“So we all understand there are some things that are going to have to change. So we’re going to have to figure out how to do that,” Toomey said. “But I’m not predicting that we’re going to go to a 22 percent corporate rate.”
The White House and Republican leaders have heard numerous complaints from wealthy GOP donors in California and New York who believe their taxes could go up under the new regime because of limits on deductions. The negotiators are trying to make changes to address those concerns before the package is completed.
Trump referenced these complaints Wednesday when he said that the final GOP tax bill should take care of the “tiny little sliver” of people who don’t benefit under the legislation as written.
The Senate voted Wednesday 51-47 to formally enter conference negotiations with the House on the legislation, a procedural step needed to move the process forward.