September 7, 2017 at 10:15 AM
Speaker of the House Paul Ryan (R – Wisc.) on Thursday suggested President Trump's goal for cutting the corporate tax rate was unworkable, offering a more modest target that he said had a better chance in Congress.
Ryan, speaking at an event hosted by the New York Times, said he was focused on brokering an overhaul of the tax code that could pass the House and the Senate, where lawmakers have to take into account the deficit impact of sweeping tax cuts.
Trump has proposed cutting the corporate tax rate from 35 percent to 15 percent, which he says will lure companies back to the United States, spur hiring, and boost economic growth.
Ryan, who is playing a central role in designing the tax plan in the House, said "our goal is to get [the corporate tax rate] in the mid to low 20s, and we think that's an achievable goal."
Asked about Trump's proposed 15 percent rate, Ryan said "the numbers are hard to make that work. He obviously wants to push this as low as possible…at the end of the day, we have to make these numbers work."
Trump had a much different take during a speech on taxes in North Dakota on Wednesday.
"Our plan will provide tax relief to businesses of all sizes," Trump said. "And we will cut the business tax rate as much as possible. Ideally, we would like to bring our business tax rate down to around 15 percent. That's a tremendous drop."
The Committee for a Responsible Federal Budget has projected that cutting the corporate tax rate from 35 percent to 15 percent would lead to a loss of $3.7 trillion in revenue over 10 years.
Ryan and other Republicans have said they plan to jettison a number of tax breaks to offset much of the losses from lower rates, but many have said the losses created by such a steep reduction would be impossible to replenish.
By targeting a corporate rate in the mid to low 20s, filling that gap would be less problematic but still somewhat of a strain.
Ryan also gave new clarity to the tax overhaul discussions.
He said negotiators planned on preserving tax incentives for charitable deductions, health insurance, and mortgages, but he said they were planning on jettisoning the tax deduction that people could take for state and local taxes. Many Republicans in states with high tax rates, such as New York and California, have raised objections to this change. Ryan suggested on Thursday it could be phased in over time.
He also said the tax writers hoped to double the standard deduction that Americans and families can claim on their taxes, which he said would remove incentives for people to itemize their tax returns, and make the process simpler.
Many other details of the tax plan remain unclear, and lawmakers are still negotiating the details.
House Republicans hope to begin voting on a tax plan later this month or sometime in October in the House Ways and Means Committee. If the plan passes, it would then face the full House of Representatives. Senate lawmakers have yet to reveal how they plan to design their version of the tax overhaul, though they are working closely with House leaders.