Corporate tax goal in doubt as Trump kicks off push on reform
U.S. Treasury Secretary Steven Mnuchin on Tuesday cast doubt on President Donald Trump’s goal of cutting the corporate tax rate to 15 percent, even as the president moved to inject new urgency into a sluggish effort in Congress to lower taxes.
“Ideally, he’d like to get it down to 15 percent. I don’t know if we’ll be able to achieve that given the budget issues, but we’re going to get this down to a very competitive level,” Mnuchin told a conference in New York hosted by CNBC.
The Trump administration is cranking up a publicity campaign to build public support for the president’s goals, but still has not produced a detailed plan for overhauling the tax code, which was one of Trump’s main campaign promises in 2016.
Republicans in Congress have yet to agree on a tax plan, despite months of high-level discussions. A major concern is not adding to the federal budget deficit. It would balloon if tax rates were cut too deeply without providing offsetting federal spending reductions and closure of tax loopholes, both politically difficult tasks.
Senator Joe Manchin of West Virginia, one of three Democrats invited to dine with Trump on Tuesday evening to talk about taxes, said he is prepared to work with the president on a tax overhaul so long as it does not add new debt to the national balance sheet.
“No new debt, anything that shows me it’s going to add debt to our nation. I’ve got 10 grandchildren. I’m not going to do that to them,” Manchin said.
Financial markets rallied after Trump’s election victory in November in anticipation of rapid tax cuts, especially for corporations that now face a 35 percent corporate income tax rate, but those expectations have faded.
“The likelihood of passing sweeping corporate reform has diminished,” said Jack Ablin, chief investment officer at BMO Wealth Management, in a research note.
Mnuchin declined to comment on what business tax rate is achievable. He said he was “incredibly hopeful” a tax plan can be enacted this year, adding it could be retroactive to January.
Republican Paul Ryan, the Republican speaker of the House of Representatives, said last week that “the numbers are hard” to make Trump’s 15 percent corporate tax rate target work. Ryan set his own goal at around 22.5 percent.
Republican lawmakers have said that Trump’s legislative deal with Democrats last week to help hurricane victims and keep the government running for another three months could complicate the tax effort, especially in terms of a corporate tax cut.
Democrats will have negotiating clout in Congress in early December to resist tax changes they oppose, potentially including a corporate rate cut.
TRUMP’S TAX TOUR
Trump plans to host six Senate Democrats and Republicans for dinner on Tuesday to press them to act on tax policy. Trump may also visit as many as 13 states to sell his planned tax cuts to voters in the coming weeks, the White House said.
He plans on continuing to visit states he won in last November’s election that also have a Democratic senator, similar to recent trips to Missouri and North Dakota, as well as states with strong Republican support, an aide said.
A White House aide said the senators who will meet with Trump include Democrats Manchin of West Virginia, Joe Donnelly of Indiana and Heidi Heitkamp of North Dakota. Senate Finance Committee Chairman Orrin Hatch of Utah and fellow panel Republicans Patrick Toomey of Pennsylvania and John Thune of South Dakota are also invited, the aide said.
The U.S. Senate begins tax overhaul hearings this week. Mnuchin and White House chief economic adviser Gary Cohn were set to meet on Tuesday with Senate Majority Leader Mitch McConnell and members of the Senate Budget Committee on Capitol Hill to discuss tax plans.
Republican Senator John Kennedy, a budget committee member, told Reuters he wants tax plans “with specificity” and expressed frustration at the slow pace of the tax debate.
“No more platitudes. Let’s see some meat on the bone,” Kennedy said. “You don’t always get what you want. I think there’s a song that says that. But you need to get what you need and that’s where we are. And I’m tired of screwing around. … The American people are tired of screwing around,” Kennedy said.
Last month, Senate Democratic Leader Chuck Schumer laid out his party’s demands for any bipartisan tax package in a letter to the president signed by 43 Senate Democrats and two independents.
Donnelly, Heitkamp and Manchin, facing re-election in states Trump won in 2016, did not sign it. The White House saw that as a sign that they are “more open to working with us,” the White House official said.
(Reporting by Roberta Rampton, David Lawder, Brendan O’Brien, Dan Burns and Svea Herbst; Writing by Alistair Bell; Editing by Kevin Drawbaugh and Will Dunham)