President Trump on Friday said he wanted to further lower the corporate tax rate, from 21 percent to 20 percent, as part of a second round of tax cuts later this year.
Trump, in an interview with Fox News to mark the six-month anniversary of the $1.5 trillion tax-cut law Republicans passed last year, said other parts of the new tax plan would be tailored to the middle class.
“One of the things we’re thinking about is bringing the 21 percent down to 20 and for the most part, the rest of it will go right to the middle class,” Trump said. “It’s a great stimulus.”
Trump said the tax plan would be ready by October, “maybe a little sooner than that.”
Trump’s interview with Fox News anchor Maria Bartiromo is scheduled to air on Sunday, but the network released some excerpts on Friday.
In the excerpts, Trump did not give more details about what he had planned in terms of tax cuts for the middle class, but Republicans have said they want to bring up a bill that would make permanent tax cuts they passed in December for families and individuals. Those tax cuts are currently scheduled to expire in 2025.
In December, Republicans lowered the corporate tax rate from 35 percent to 21 percent. Lowering the corporate tax rate from 21 to 20 would result in an additional $100 billion in tax cuts over 10 years, according to most models.
Trump also didn’t say whether Republicans planned any other changes to tax policy that might offset these new tax cuts in a way that would prevent a further increase in the deficit. The Congressional Budget Office and other nonpartisan analyses project the tax law passed in December will add more than $1 trillion to the deficit over the next decade. The White House has argued these figures overstate the increase in the deficit, as administration officials generally believe cutting the corporate tax rate leads to tremendous economic growth, thereby creating enough revenue to minimize the fiscal impact.
It could not be immediately learned whether there is broad GOP support for further lowering of the corporate tax rate, and it’s possible some Republicans would block the effort to drop the rate to 20 percent. Since passing their tax law, Republicans have mainly talked about the importance of impressing on voters how the legislation will do more for workers, and they have not talked much about the need to provide more assistance for corporations.
Some Republicans in Congress however have already pushed for further cuts, calling the new package “phase two.”
House Ways and Means Committee Chairman Kevin Brady (R-Tex.) said this week he expects to try to advance several bills to extend tax cuts before the November midterm elections.
“I expect to see the legislative outline released in early August with votes in the fall, depending on when leadership wants to schedule them,” Brady said Tuesday at an event hosted by The Washington Post. “I don’t see it as one bill. I see it as a package of two, three or four approaches with permanency [in the tax cuts for families and individuals] being one of them.”
Republicans passed the tax package in December using a parliamentary maneuver that allowed them to move the legislation with a simple majority of votes in the Senate, rather than the 60 votes typically required to beat a filibuster.
No Democrats voted for the tax bill, saying they believed it does too much for the wealthy and businesses and not enough for the middle class. Many Democrats also objected to the bill’s projected additions to the deficit.
Republicans have hailed the bill’s passage and said it is leading to a sharp uptick in economic growth, hiring and wages, though results have so far been mixed. A number of companies did announce a spate of one-time bonuses or wage increases because of the legislation, but this applied to a minority of workers.
Wages have generally continued to increase at the same pace they were rising before the legislation was passed. There has also not been a noticeable uptick in capital investment, compared with other countries, though a number of firms have announced immense stock buybacks that immediately benefit shareholders.
Public opinion polls show the majority of Americans still view the tax cuts relatively negatively, with many believing the wealthy and corporations are the biggest recipients of the benefits.
Still, holding a vote on further tax cuts in September or October could prove a thorny political problem for vulnerable Democrats running for reelection in November.
Trump originally wanted to lower the corporate tax rate to 15 percent, but congressional Republicans pushed him higher, constrained by budget rules that limited the scope of the tax cuts. Republicans could try to waive those rules for the second phase of a tax-cut package, though they would need support from Democrats to do this.
There has not been much of a push from business groups since the tax legislation was passed for further reductions in the corporate rate. Rather, they have been mostly worried about the economic impact of the trade fights Trump has engaged in with a number of countries. But tax cuts remain popular with many business groups and they could be used as a way for the White House to get many companies to back down on their opposition to his trade agenda.