Donald Trump 'to order corporate tax rate to be cut to 15 per cent despite fears for US national debt'

Barney Henderson
Donald Trump - Copyright 2017 The Associated Press. All rights reserved.

Donald Trump has ordered aides to draft a tax reform plan that cuts the corporate tax rate to 15 per cent despite the fact that such a move would increase the national debt and expand the government's budget deficit, according to reports.

The US president, who is seeking a first major legislative victory almost 100 days since he took office, ordered his team to “get it done”, the Wall Street Journal reported, and wants to announce the plan on Wednesday. 

The tax cut, which Mr Trump proposed during his election campaign, would reduce the corporate income tax rate to 15 per cent from the current rate of 35 per cent, as the president aims to oversee "the biggest tax reform" since Ronald Reagan's in 1986.

It would clearly prioritise lower taxes over the national debt, which could lead to opposition from some Republicans in the House of Representatives.

When Mr Trump first proposed the tax cut on the campaign trail, the Tax Policy Center think tank estimated it would reduce federal revenue by $2.4 trillion over 10 years, the Washington Post reported.

However, Trump aides argued this would be offset by the new revenue created by the rapid economic growth it would trigger.

Large-scale US tax reform is a legislative feat that has since defied every president since Reagan.

Wall Street analysts said Mr Trump may instead offer a package of rate reductions, like those backed by Reagan in 1981 and President George W. Bush in 2001, which left the tax system intact.

trump

If that is the case, it "is not tax reform. It is a tax cut," Chris Krueger, an analyst at financial firm Cowen & Co, told Reuters.

On Wednesday, Mr Krueger said, "We will get some vague benchmarks about rate levels... with likely no detail on how to finance those reductions except for the assurance that the growth projections will take care of it."

The announcement could also show whether Mr Trump is turning away from a Republican plan backed by House of Representatives Speaker Paul Ryan that would pay for tax cuts with an import tax and by killing a business interest deduction.

Mr Ryan and other Republicans will get a preview of Mr Trump's plan on Tuesday at a Capitol Hill meeting with Treasury Secretary Steven Mnuchin and Gary Cohn, director of Trump's National Economic Council, aides said.

RegisterLog incommenting policy

By using Yahoo you agree that Yahoo and partners may use Cookies for personalisation and other purposes