Although the conservative agenda has been crawling through Congress at the pace of a snail slugging through honey, it appears that the Republican Congress will have yet another opportunity to pass a huge part of the GOP agenda in 2017: tax cuts. And one surprising part of this effort may attract the support of some Democrats.
Republican tax negotiators are targeting a corporate tax rate of 20 percent, according to two people familiar with the matter. That would be higher than President Donald Trump wants — setting up a key decision for the president on a top legislative priority.
Trump has called for cutting the corporate rate to 15 percent, down from the current 35 percent. The plan he’ll see this week is also expected to recommend cutting the top individual tax rate to 35 percent, down from 39.6 percent, two people familiar with the matter said.
Economists differ on whether such tax cuts are generally stimulative to the economy or simply increase the deficit. Conservative economists believe tax cuts for businesses and individuals will translate into more jobs, better pay and faster economic growth – or in the words of the president, a greater America.
Conversely, progressives such as Bernie Sanders want tax rates as high as 52% on “millionaires and billionaires.”
However, there may be a greater consensus on a lower corporate tax rate.
As the Tax Foundation points out:
There is near unanimous bipartisan agreement in Washington that the U.S. corporate tax rate is out of step with rates levied by most industrialized nations and that America’s global competitiveness is suffering as a result.
Even current Senate Minority Leader Chuck Schumer once argued that a lower corporate tax rate would be beneficial to our economy if it would prevent corporations from keeping their money overseas:
“If you can get overseas money to come back here, even if it’s at a lower rate than the 35 it now comes back at, and you can use that money for a major constructive purpose such as infrastructure.”
Of course, long-seated Democrats such as Senator Schumer once supported a lot of things they would never support today: the Iraq War, traditional marriage, border security, opposition to late-term abortion and so on.
But one could hope that Senator Schumer won’t oppose a lower corporate tax rate so soon after he supported it — especially if his constituents learn about its benefits. Politico reports:
Trump’s task is complicated by the fact that the administration would like the support of Democrats. That’s why he’s concentrating his roadshow on states with vulnerable Democratic senators up for re-election in 2018.
The White House hopes some of these Democrats may be convinced to support a Republican-led bill especially if the legislation preserves taxes on the wealthy – one of the ongoing debates.
Even the relatively esoteric idea of bringing companies’ overseas profits back to the U.S., known as “repatriation,” is being cast by the White House as a win for the middle-class and potential area for bipartisanship. “If you are a firefighter or union worker with a pension plan, just look at the last time the U.S. had repatriation. The S&P ticked up 6 percent almost immediately. That has a direct impact on your pension. That is real money in people’s pockets,” said one White House official.
The economic arguments for a corporate tax are solid, even if the politics are not. One hopes that — even with the nation seemingly hopelessly divided, American legislators can agree on doing something that will benefit all.