Bloomberg Politics reports that Donald Trump’s large tax break for U.S. corporations may fall short of their promises. Trump has promised the largest tax cut in history for corporations in the United States, but congressional rules and political concerns may curb the ambitious cuts, according to tax experts.
The publication states that the corporate tax rate is likely to only go as low as 28%, greatly missing the 15% tax rate that President Trump proposed.
The Trump Administration has promised that the tax rate will be agreed upon in September, but there have been no comments on the matter thus far. Trump’s major message on the campaign trail was to lower taxes for corporations and spur job growth in the country – two major goals that are in jeopardy if the tax cuts don’t materialize.
The Washington Examiner reports that Trump is backing off of his 15% corporate tax rate pledge, according to Senate Finance Committee Chairman Orrin Hatch. Hatch spoke to Fox Business during an interview, stating, “I think the president has probably come off of that particular figure recently.”
Hatch, seen as an insider on the matter, has met with the leaders of Congress on multiple occasions in recent weeks to discuss the tax plan.
Paul Ryan, House Speaker, suggested a 20% tax rate for corporations.
Hatch has not placed a figure on his desired tax rate, but he has called a 15% tax rate “wonderful.” He suggests that a 25% or 20% tax rate would help turn around the economy overnight. He also acknowledges that tax breaks will need to be eliminated from current legislation to help offset the tax rate deduction.
Not eliminating current tax deductions has severe consequences, with the potential to add to the federal deficit.
A recent study suggests that a 28% tax rate would have little impact on the 150 biggest companies in the country. The study found that the largest corporations already pay below the suggested 28% tax rate when considering data from between 2008 and 2015.
Tax subsidies and aggressive tax avoidance measures allow many corporations to shelter their money and pay less taxes. Loophole removals are just one measure discussed among Congress which would allow for less of a potential deficit. Business tax law allows corporations to pay less taxes and legally avoid the high 35% tax rate currently in place.
Provisions need to be implemented and put in place to help end the unrealistic tax cuts under the Trump administration, according to analysts. Temporary cuts have been rumored and discussed in Congress, but opposition from corporations is likely to stop the measures before they would be implemented.
