After failing to pass a bill repealing and replacing Obamacare, the Trump administration announced that they’d focus on tax reform before revisiting the healthcare issue.Treasury Secretary Steve Mnuchin confirmed today that tax reform was coming soon, focused primarily on the corporate tax rate, since America has the third-highest in the world (35 percent). Unlike your typical tax, the corporate income tax results in a form of double taxation. Shareholders in a company pay the corporate income tax through the company in which they’re all shareholders — and then are taxed again when they take a dividend from that same company.
It’s a contributing factor in why many American businesses decide to set up shop overseas – or get creative in taking advantage of another nation’s tax laws (a somewhat-recent example being when U.S. based Burger King merged with Canadian-based Tim Hortons so they could instead pay Canada’s lower corporate tax rate).
According to Fox News, Steve Mnuchin confirmed Wednesday that the Trump administration aims to lower the corporate tax rate to 15 percent, saying a forthcoming proposal will constitute the “biggest tax cut” for Americans in history.
“This is going to be the biggest tax cut and the largest tax reform in the history of our country,” Mnuchin said, as administration officials prepare to outline Wednesday afternoon what he described as “principles” of their tax plan.Mnuchin, speaking at a Washington forum hosted by The Hill, would not reveal many specifics but confirmed that they want to lower the corporate rate to 15 percent, from 35 percent.
Mnuchin also said the administration wants to “do the whole thing,” and not pursue tax reform piece by piece. Amid concerns that such sweeping tax cuts would significantly reduce revenue for the government, he suggested economic growth will help pay for the plan.
The administration reportedly also wants to cut the top rate for small business owners to 15 percent from 39.6 percent.The administration is also looking at a big increase in the standard deduction. Under the plan, Fox News is told, a family of four would have a standard deduction of $24,000.
If passed, this would be the first time we saw major tax reform since 1986. It could be more likely than you think – as Paul Ryan saw a preview of the tax plan, and said that the House is in “80 percent agreement” regarding it.Next up – garnering 80 percent support on an Obamacare repeal.
[Note: This post was authored by Matt Palumbo. Follow him on Twitter @MattPalumbo12]