Corporate Tax Cut to Be Phased Out After a Decade – Bloomberg

House tax writers are planning on phasing out the proposed corporate rate of 20 percent after a decade, according to a Republican lawmaker familiar with the negotiations.

Cutting the corporate tax rate to 20 percent from 35 percent is a key provision of the tax legislation that Republican congressional leaders plan to unveil on Thursday. But there have been conflicting reports about when the rate cut would take effect — or how long it would last.

Making the rate-cut temporary would limit its ability to spur economic growth — a key selling point cited by President Donald Trump and others.

Congressional tax writers are struggling to find enough revenue to help the tax package adhere to the 2018 budget Congress adopted last month. That budget would allow the legislation to add no more than $1.5 trillion to the federal deficit — before accounting for any economic growth that might result.

The notion of phasing in the corporate rate cut has emerged in the context of that discussion — as have other potential ways to adjust costs or boost revenue. The corporate cut was estimated to cost $1.6 trillion over a decade, according to estimates from the Tax Foundation, a Washington policy group.

House Ways and Means Chairman Kevin Brady has said that he wants to maximize growth in the early years, however.

The congressional Joint Committee on Taxation said in an April letter to House Speaker Paul Ryan that a corporate tax rate of 20 percent would create deficits in the long run even if it remained in effect for just three years.

    Corporate Tax Cut to Be Phased Out After a Decade – Bloomberg

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