Comprehensive tax reform in 2017 is a known, bipartisan priority among congressional tax writers, but the details of what that package will look like remain uncertain. Specifically, House Republicans and the Trump administration have different ideas of what the corporate tax rate should be. Moreover, House Republicans are not yet in agreement with one another on such proposals.
The House Republican tax reform blueprint calls for a 20 percent corporate tax rate, while President Trump has proposed a 15 percent business tax rate (TAXDAY, 2017/04/27, W.1). And on July 12, House Freedom Caucus Chair Mark Meadows, R-N.C., during a caucus news conference, put forth his proposal of a 16 percent corporate tax rate. The top corporate tax rate currently rests at 35 percent but with many variations on the effective rate due to a variety of deductions and credits, as well as income recognition rules.
While the details of tax reform require further discussion, the process does not have to be a partisan exercise, Senate Finance Committee (SFC) Chairman Orrin G. Hatch, R-Utah, said in a July 12 speech on the Senate floor. Hatch pointed to several Democratic positions, those of lawmakers and past presidents, which have called for reduced corporate tax rates, including SFC ranking member Ron Wyden’s, D-Ore., proposal to reduce corporate tax rates by more than 10 percent.
“Our high corporate tax rate isn’t just a burden on faceless corporations or rich shareholders. The burden is disproportionately borne by the factory workers, the scientists, and even the janitors who work for corporations, large and small,” Hatch said.
The U.S. has the highest statutory corporate tax rate in the developed world, Hatch noted. The effective U.S. corporate tax rate ranks fourth among all G-20 countries, he added.
While much of the Senate’s focus has been on health care reform lately (TAXDAY, 2017/07/11, C.1), House Speaker Paul Ryan, R-Wis., has said that”tax reform is coming along.” Both House and Senate leadership met with White House leaders on July 11 to discuss tax reform. According to Ryan, the meeting was “very constructive.”
To that end, the House Ways and Means Tax Policy Subcommittee is scheduled to hold a hearing on July 13 to examine how tax reform will create new jobs and help small business growth. Further, the Subcommittee announced on July 12 that an additional hearing will be held on July 19 to continue examination of tax reform proposals.
By Jessica Jeane, Wolters Kluwer News Staff