Here are some predictions about tax reform, parsing the over-hyped Big Six joint statement on tax reform.
A corporate rate cut will be the centerpiece.
“The United States has the highest tax rate on business anywhere in the world,” said President Donald Trump. “It’s time to pass a tax cut for middle class families.” He has finally clarified that it is the US corporate rate--not U.S. taxation generally--that is relatively high.
Multinationals have been agitating for a rate cut and a territorial system for a decade. They tried for years with Democrats, then got lucky that Republicans want these tax cuts. There is a Republican president and a Republican majority in both houses. Republicans like to cut taxes.
White House economic advisor Gary Cohn recently stated that he wants a corporate rate less than 23%. That low level is also what multinationals want. The president is calling for a 15% rate. Senate Finance Committee Chairman Orrin Hatch said that 25% would be difficult to achieve. House Ways and Means Committee Chairman Kevin Brady is circumspect about rates.
Lower than 25 percent ain’t gonna happen. The rate will probably settle around 29%, which is too high for some business appetites.