White House, GOP lawmakers debate steep cuts to corporate tax rate

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While the White House and Republican lawmakers agree that the current corporate tax rate is too high for US companies, a fierce internal debate is raging over how low that rate could be cut to as they work on drafting tax reform legislation.

"Some policymakers want to cut it more deeply than others," US political website The Hill reported on Sunday, noting the lack of unity is a challenge for Republicans to pass the legislation by the end of the year.

The Trump administration had called for cutting the corporate tax rate to 15 percent from the current 35 percent, according to the principles of the tax reform plan unveiled by the White House in April.

Xinhua Photo

Mark Meadows, Chairman of the conservative House Freedom Caucus, also wanted to cut the corporate rate to 15 or 18 percent, believing that a tax rate in the 20s might not lead to enough economic growth.

But Senate Finance Committee Chairman Orrin Hatch, who worked on the tax reform legislation, said last week that a 15-percent rate would be very difficult to achieve.

"The president wants them down to 15 percent. I'd love that if we could. I doubt that we can, though," Hatch told reporters, adding "it'd be a great thing if we could get it down to 20 percent."

The degree to which the corporate tax rate will be lowered depends on whether a tax-reform bill is revenue-neutral and what policymakers are willing to do so as to raise revenue to offset rate cuts, according to the report.

As the White House and the so-called Grand Old Party (GOP) leaders have set aside the controversial border adjustment tax proposal, which could raise about 1.2 trillion US dollars in revenue over ten years, the corporate tax rate is more likely to be lowered to around 20 percent than around 15 percent, the report said.

Gary Cohn, director of the National Economic Council and White House economic adviser arrives for a meeting with then US President-elect Donald Trump in New York November 29, 2016. /Xinhua Photo

White House National Economic Council Director Gary Cohn suggested that the US must cut its corporate tax rate by at least a third to compete with other developed countries.

"We cannot be substantially higher than the OECD average tax rate out there," Cohn told Bloomberg TV on Friday, referring to the average corporate tax rate of 23 percent among countries in the Organisation for Economic Co-operation and Development.

"We've got to get in line with the rest of the world, we've got to entice capital to be invested in the United States," he said.

As Senate Republicans failed to repeal the Obamacare healthcare law in recent weeks, GOP congressional leaders have vowed to shift legislative priorities to the long-awaited tax reform.

It's not clear whether the Republican-controlled Congress could pass the tax reform legislation by the end of this year.

(Source: Xinhua)