With Republicans in Congress under pressure to deliver on taxes, House Speaker Paul Ryan said Thursday the GOP plan will aim to reduce the corporate tax rate to low- to mid-20 percent — a smaller cut than what President Donald Trump wants.
Ryan provided some specifics as the Republicans start to write legislation overhauling the tax system, with help for the middle class a main goal. He spoke as Congress was consumed with providing billions of dollars in relief for hurricane-ravaged Texas, and prospectively for Florida, and with addressing the plight of immigrants facing possible deportation as a result of Trump’s decision to end an Obama-era program for young immigrants.
Trump, who made overhauling taxes a pillar of his push for economic growth, has called for a 15 percent tax rate for corporations. The rate now ranges from 15 percent to 35 percent. The average tax rate paid by corporations is around 19 percent to 25 percent, according to the Treasury Department and congressional analysts.
Some experts say a 15 percent rate isn’t possible without blowing a hole in the deficit.
Ryan recognized that as he discussed a higher range during an appearance at a New York Times forum. “Numbers are hard to make that work,” he said.
A popular idea among lawmakers is to reduce tax rates for both individuals and corporations, and make up the lost revenue by eliminating special-interest loopholes. But even if Congress eliminated nearly every tax break enjoyed by corporations, it would raise only enough revenue to lower the corporate tax rate to 28.5 percent, according to an analysis by Scott Greenberg, a senior analyst at the conservative Tax Foundation.
Ryan expects tax legislation to pass Congress this year.
“This is our No. 1 priority this fall,” he said at a Capitol Hill news conference later Thursday. “It’s about growth. It’s about fairness. It’s about finally giving American families a tax break.”
Revising the nation’s tax system for the first time in three decades is a GOP priority in the wake of the collapse of efforts to repeal and replace former President Barack Obama’s health care law.
But Hurricane Harvey and Trump’s decision to rescind a program protecting some 800,000 immigrants from deportation have saddled Congress with new challenges. When Trump blocked the program known as Deferred Action for Childhood Arrivals, created by Obama through administrative action in 2012, he gave Congress six months to act.
To ensure money for hurricane relief, Trump overruled congressional Republicans and his own treasury secretary Wednesday to cut a deal with Democrats to keep the government operating and raise the U.S. debt limit.
The already compressed timetable for coming up with an overhaul of the tax system came under further pressure with Congress’ additional and urgent workload.
Treasury Secretary Steven Mnuchin said Thursday he thinks “it’s still very viable to get it done this year.”
“We’ve made a lot of progress” in talks with GOP congressional leaders, Mnuchin said in an interview on Fox Business Network’s “Mornings with Maria.” “Our objective is to get this done.”
Asked whether he was worried about a revolt by Republicans in Congress if a tax overhaul isn’t achieved, Mnuchin said, “I’m not worried about any GOP revolt at all. You know we’ve been meeting with them on the tax plan. We have an understanding on this tax plan.”
The head of the House tax-writing committee also rejected suggestions that the tax overhaul could get sidelined by Congress’ pressing new priorities. “I don’t think it changes the trajectory or the timing,” Rep. Kevin Brady, the Texas Republican who chairs the Ways and Means Committee, told reporters.
Brady declined to comment specifically on Ryan’s low- to mid-20 percent range for corporate taxes. “We’re trying to drive those rates as low as we can,” he said.
Not only will tax legislation pass by year end, but it will provide for retroactive tax cuts back to the start of 2017, predicted the White House budget director, Mick Mulvaney.
“If you stop to think what the priorities are right now for the administration, No. 1 priority is Houston, No. 2 is Florida, and the No. 3 is the tax reform package,” Mulvaney said on Fox Business Network’s “Cavuto Coast to Coast.”
So “clearing the decks” first on hurricane aid with Trump’s debt limit deal was the right way to proceed, he said.