Slash to cor­po­rate rate a hard sell

The Washington Times Weekly - - Politics - BY S.A. MILLER

Pres­i­dent Trump’s team is work­ing over­time to con­vince Amer­i­cans that the Repub­li­can tax re­form plans, which tilt de­cid­edly to­ward low­er­ing rates for busi­nesses, will be a boon for mid­dle­class fam­i­lies.

The mes­sage for the most part has failed to take hold out­side Repub­li­can con­fer­ence rooms on Capi­tol Hill. Even some hard-core Trump sup­port­ers aren’t buy­ing it.

“Maybe Repub­li­cans aren’t mak­ing that case strong enough,” Her­itage Foun­da­tion tax pol­icy an­a­lyst Stephen Moore told The Washington Times.

“A busi­ness tax cut is a mid­dle-class tax cut,” he said. “The whole rea­son we want to cut the busi­ness taxes is to ben­e­fit work­ers so that there are more jobs, higher wages, more com­pa­nies come back to the United States. It’s all about mak­ing the Amer­i­can econ­omy more com­pet­i­tive, which ben­e­fits the mid­dle class.”

Mr. Moore helped write Mr. Trump’s tax plan dur­ing the pres­i­den­tial cam­paign. The orig­i­nal pro­posal in­cluded a deeper cut to the cor­po­rate rate and big­ger re­duc­tions across tax brack­ets for in­di­vid­u­als. Those cuts added up to about $3 tril­lion in lost rev­enue and needed to be trimmed and re­shaped to fit into the $1.5 tril­lion hole con­gres­sional Repub­li­cans al­lowed in the bud­get.

Mr. Trump orig­i­nally pro­posed re­duc­ing the cor­po­rate rate from 35 per­cent to 15 per­cent. He in­sisted that the House and Se­nate give him at least a 20 per­cent rate.

As a re­sult, the House Repub­li­can bill gave more than 70 per­cent of the $1.4 tril­lion in tax cuts to busi­ness and the Se­nate Repub­li­can bill gave nearly 60 per­cent, ac­cord­ing to an anal­y­sis by The Times.

The busi­ness tax cuts in­clude the 20 per­cent rate for cor­po­ra­tions and a cut in the rate paid by small busi­nesses that file through the in­di­vid­ual side of the tax code.

Repub­li­cans say those busi­ness tax cuts will end up help­ing av­er­age Amer­i­cans too.

A typ­i­cal fam­ily with an in­come of about $60,000 would get a tax cut of $1,182 un­der the House bill, Repub­li­cans said. But adding in higher wages from an econ­omy su­per­charged by lower taxes and reach­ing 3.5 per­cent growth, an av­er­age mid­dle-in­come house­hold would get an ex­tra $1,400, rais­ing their af­ter-tax in­come by nearly $2,600.

“I al­ways viewed the busi­ness tax cut as the heart and soul of this plan,” Mr. Moore said.

Re­gard­less, cor­po­rate rate cuts are not pop­u­lar among vot­ers. Just 35 per­cent of Amer­i­can vot­ers who have seen, read or heard about the tax plan sup­port cut­ting the cor­po­rate tax rate, ac­cord­ing to a Morn­ing Con­sult/Politico poll.

A Reuters/Ip­sos poll found that only 8 per­cent of Amer­i­cans be­lieve the tax re­forms will ben­e­fit the mid­dle class. About 32 per­cent said the wealthy will ben­e­fit the most and 14 per­cent said U.S. cor­po­ra­tions will ben­e­fit the most, ac­cord­ing to the poll.

Mr. Trump sig­naled that he wanted big­ger tax cuts on the in­di­vid­ual side. In a tweet while trav­el­ing in Asia, he sug­gested adding a re­peal of the Oba­macare man­date to buy health in­sur­ance in the tax re­form bill to pay for more cuts.

The Con­gres­sional Bud­get Of­fice

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