Trump waffles on size of corporate tax cut

Mr Donald Trump last Saturday suggested he would consider a corporate tax rate of 22 per cent, hours after lawmakers in the House and Senate won the fight to cut it to 20 per cent.
Mr Donald Trump last Saturday suggested he would consider a corporate tax rate of 22 per cent, hours after lawmakers in the House and Senate won the fight to cut it to 20 per cent.PHOTO: BLOOMBERG

WASHINGTON • Hours after the pre-dawn passage of a US$1.5 trillion (S$2 trillion) tax cut, President Donald Trump suggested for the first time that he would consider a higher corporate rate than the one Senate Republicans had just endorsed.

His remarks could complicate sensitive negotiations to pass a final Bill.

On his way to New York for three fund-raisers last Saturday, Mr Trump told reporters that the corporate tax rate in the GOP plan might end up rising to 22 per cent from 20 per cent.

Lawmakers in the House and Senate had fought hard to keep the corporate rate low, with the Senate late last Friday rejecting a Republican-backed proposal to push it up to 21 per cent in exchange for more working-family tax breaks.

The Senate passed the final version of its Bill on a 51-to-49 vote just before 2am last Saturday.

The House and Senate intend to take steps as soon as today to set up a conference committee to negotiate the significant differences between the Senate plan and the version passed by the House last month.

But Mr Trump's statement threatened to introduce a complication.

"Business tax all the way down from 35 to 20," Mr Trump told reporters, remarking on a core provision of the Senate Bill.

"It could be 22 when it all comes out, but it could also be 20. We'll see what ultimately comes out."

Moving the corporate tax rate up by 2 percentage points could raise US$200 billion, money Mr Trump might need to try to satisfy the concerns of Republicans frustrated that the plan does not reduce top individuals' tax rates enough, or of others such as Senator Marco Rubio, who argued that the Bill should do more for low-income families.

Republicans have said lowering the corporate tax rate will help businesses free up money to invest, grow and raise wages.

Senate Majority Leader Mitch McConnell dismissed suggestions that the corporate rate could rise to 22 per cent, pointing to votes in both the House and Senate that would set it at 20 per cent.

"That would be a major change," Mr McConnell said, adding that the vote showed there is not "much of a margin".

House conservatives have opposed a higher corporate rate, with congressman Mark Meadows saying that anything above 20 per cent would be unacceptable. It remains to be seen how the President's endorsement of a higher rate might affect their stance.

The current US statutory rate of 35 per cent is the highest among major industrial economies, though many corporations pay a far lower rate.

WASHINGTON POST

A version of this article appeared in the print edition of The Straits Times on December 04, 2017, with the headline 'Trump waffles on size of corporate tax cut'. Print Edition | Subscribe