President Trump and House Speaker Paul Ryan, R-Wis., appear to agree on the timeframe for unveiling a tax reform plan, but there may be some disagreement as to the proposed corporate tax rate. Trump, in a speech in North Dakota on September 6, predicted that tax reform provisions will come to light “in great detail” over the next two weeks. Likewise, Ryan, in a September 7 sit-down Q&A with The New York Times, said that a tax reform plan will be released this fall and enacted by the end of 2017.
As for the size of a corporate tax rate cut, the details remain uncertain. Trump has consistently stated that he would like to see the rate lowered to 15 percent (TAXDAY, 2017/08/31, W.1). Ryan, however, seems skeptical about the chances of that particular proposal’s success.
“The numbers are hard to make that work,” Ryan said. “Our goal is to be at or below the industrial world average, and that is 22.5 [percent], so our goal is to get in the mid-to-low twenties, and we think that’s an achievable goal,” he added.
As for the exact corporate or business tax rate cut that taxpayers can expect to see, Ryan said he will leave that up to the taxwriters. The “[House] Ways and Means [Committee] will release their template, and it will then start moving through committee legislation,” Ryan said.
Trump also called for bipartisan tax reform during his speech, asking that Democrats, Republicans and Independents alike come together on tax reform.” I’m committed to working with both parties…” Trump said. He added that the tax reform plan soon to be unveiled would transition the U.S.’s current worldwide tax system to a territorial system that ” encourages companies to bring their profits back home to America.”
Under current law, a corporation pays income tax on all of its income, both domestic and foreign, once the earnings are brought back to the U.S. Generally, under a territorial system, the corporation would only pay tax on U.S.-earned income; most or all foreign income would likely be exempt. Former Ways and Means Chairman Dave Camp released draft tax reform legislation that would exempt 95 percent of active foreign income. Reportedly, provisions within Camp’s proposal, as a whole, are said to be under consideration.
According to Ryan, wage growth and international competitiveness (achieved by lowering the corporate tax rate) are the two main goals of tax reform. “You get wage growth by encouraging businesses to stay,” and create jobs here, he said. ” We want America to wake up on New Year’s Day in 2018 with a new tax system.”
Ways and Means Members Leaving
In other news, several Ways and Means members have announced that they will be leaving Congress in 2018. Those members include Reps. Dave Reichert, R-Wash., James Renacci, R-Ohio, Kristi Noem, R-S.D., Diane Black, R-Tenn., Lynn Jenkins, R-Kan., and Sam Johnson, R-Tex.
By Jessica Jeane, Wolters Kluwer News Staff