Donald Trump's to release tax plan Wednesday that will sharply slash corporate tax rates

US President Donald Trump (right) holds up the Executive Order Promoting Agriculture and Rural Prosperity in America during a roundtable with farmers at the White House.
US President Donald Trump (right) holds up the Executive Order Promoting Agriculture and Rural Prosperity in America during a roundtable with farmers at the White House. PHOTO: EPA

WASHINGTON (REUTERS) - United States President Donald Trump will release a tax plan on Wednesday (April 26) stating broad principles and proposing some deep cuts, mostly for businesses, including a slashed corporate income tax rate and steeply discounted tax rate for overseas corporate profits brought into the US, officials said.

Trump intends for his blueprint, which will fall short of the kind of comprehensive tax reform that Republicans have long discussed, to be a guidepost for lawmakers in the US House of Representatives and Senate. "We're driving this a little bit more," a senior White House official told a group of reporters late on Tuesday.

The plan is not expected by analysts to include any proposals for raising new revenue, potentially adding billions of dollars to the federal deficit.

Trump sent Treasury Secretary Steve Mnuchin and National Economic Council Director Gary Cohn to Capitol Hill on Tuesday to brief lawmakers on the plan to be unveiled on Wednesday afternoon, likely by Mnuchin.

Mnuchin has been leading the administration's effort to craft a tax package that can win support in Congress, although the proposals under consideration would have a long way to go before they become law, even with Republicans in control of both the House and Senate.

Trump directed aides to cut the income tax rate paid by public corporations to 15 per cent from 35 per cent, another administration official said.

The second official also said Trump planned to propose a repatriation tax on offshore earnings along the lines of his campaign proposal for a 10 per cent levy, versus the 35 per cent due on repatriated foreign profits under present law.

The plan also will include a sharp cut in the top tax rate on pass-through businesses, including many small business partnerships and sole proprietorships, to 15 per cent from 39.6 per cent, the official said.

Trump's proposal will not include a controversial"border-adjustment" tax on imports that was in earlier proposals floated by House Republicans as a way to offset revenue losses resulting from tax cuts.

Mnuchin has said the cuts will pay for themselves by generating more economic growth but fiscal hawks, potentially some in Trump's own Republican Party, along with Democrats are certain to question these claims.

Trump also may cap the individual top tax rate at 33 per cent, repeal the estate and alternative minimum taxes and cut taxes for the middle class, analysts said.

Whether Trump will include provisions that could attract Democratic votes, such as a proposal to fund infrastructure spending or a child-care tax credit as proposed by his daughter Ivanka, is still the subject of speculation.

CAPITOL HILL MEETING

Mnuchin and Cohn, both veterans of investment bank Goldman Sachs, went to Senate Republican Leader Mitch McConnell's office on Tuesday evening, where they all met with House Speaker Paul Ryan, and the chairmen of the House and Senate tax committees, Orrin Hatch and Kevin Brady, respectively.

Hatch called it a "preliminary" 30-minute meeting and participants described it as positive and productive.

As Mnuchin left the Capitol he told reporters there is "no question" the Trump administration and Republicans in the Senate and House agree on the "fundamental principles of tax reform." The senior White House official said Trump would like to see Congress pass tax reform by the middle of autumn.

Trump has struggled to advance his domestic agenda, including taxes, even though his Republican Party controls Congress. With his 100th day as president approaching on Saturday, he has yet to offer formal legislation to Congress or win passage a major bill he favours.

Some Washington policy analysts said the White House plan could clash in some ways with a broader tax plan shaped months ago by House Republicans, and complicate the consensus-building needed for full tax reform, a political feat not accomplished since 1986 when President Ronald Reagan pulled it off.

The House Republican plan, championed by Ryan and Brady, proposed a 20 per cent corporate tax rate. Many US corporations, especially large multinationals, already pay well below the statutory 35 per cent tax rate but have been campaigning for a formal rate cut for many years.

The Ryan-Brady plan did include "pay-fors," including a proposed "border adjustment" tax that would favor exports and discourage imports.

When asked after Tuesday's briefing if Republicans had ruled out including a border adjustment tax in a tax overhaul, Hatch said: "I wouldn't say that. The House hasn't given up on that but they've acknowledged it needs some work."

Separately cutting the top tax rate for pass-through businesses, which account for most US companies, could benefit Trump himself, said Frank Clemente, executive director of Americans for Tax Fairness, a Democratic activist group. "In trying to slash taxes for pass-through business entities, Trump is seeking to dramatically reduce his own tax bill," he said in a statement.