Aide tries to refocus U.S. tax debate after Trump’s corporate rate remark

Published 08/12/2017 in Business, Economy & Finance

Aide tries to refocus U.S. tax debate after Trump’s corporate rate remark
FILE PHOTO: U.S. President Donald Trump gestures as he speaks at the White House in Washington, U.S., November 27, 2017. REUTERS/Kevin Lamarque

WASHINGTON (Reuters) – President Donald Trump’s weekend remark about a scaled-back tax cut for corporations sparked behind-the-scenes debate in the U.S. Congress, with a White House aide trying on Thursday to minimize the impact of the president’s comment.

Two rival tax bills, passed separately by the Senate and the House of Representatives, propose cutting the U.S. corporate tax rate to 20 percent, but they differ in other areas that Republicans are trying to merge into final legislation.

Speaking to reporters after the Senate approved its tax bill on Saturday, Trump said the corporate tax rate in the final legislation, expected soon from lawmakers, “could be 22 (percent) … it could also be 20 (percent).”

The remark whetted the interest of some Republicans who see a slight upward bump in the proposed corporate tax rate as capturing needed federal revenue that would help solve other problems with the legislation, according to lobbyists.

“The 20 percent rate ought to be our goal,” said House Ways and Means Committee Chairman Kevin Brady, who is expected to head a bicameral House-Senate negotiating committee.

“My view is the president is giving us flexibility in that area if it’s needed. No decision’s been made on if that’s needed,” the Texas Republican told reporters.

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Republicans are considering a more costly deduction for state and local taxes than the $10,000 property tax deduction contained in the House and Senate bills. One version would allow taxpayers to choose a $10,000 deduction for either property or income taxes.

House lawmakers also want to adopt the House bill’s repeal of the corporate alternative minimum tax, which would cost about $40 billion in revenue over a decade, according to the Joint Committee on Taxation. Senate retained the tax.

A House limit on the amount of debt interest payments that businesses can deduct from their income would also cost about $136 billion more than the Senate version, the JCT said.

Analysts say a one percentage point change in the corporate rate equals about $100 billion in revenues over a decade.

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