Exclusive: Trump, GOP to cut top individual rate to 35%, Corporate tax rate from 35% to 20%.

Axios ^ | 09/23/2017 | Jonathan Swan

[SeekAndFind]

President Trump and Republican leaders plan to cut the top tax rate for the wealthiest Americans to 35 percent and dramatically reduce taxes on big and small businesses, according to details leaked to Axios.

Why it matters: It's the first glimpse of the tax reform plan agreed upon in secret between the "Big Six" congressional leaders and administration officials. It forms the starting point of the tax reform process, which will play out over the coming months.

The big change: The GOP leaders and the White House plan to cut the top tax rate for “pass through" businesses from 39.6 percent to 25 percent. (Most businesses in America do not pay the corporate tax. Sole proprietors and other mostly smaller businesses see their profits “passed through” to their owners and taxed at the individual income rate.)

The so-called "Big Six" tax framework — named because it's been hashed out behind closed doors between six top Republicans and administration officials — will set up a clash with Democrats over the tax breaks that apply to large corporations and upper income Americans.

• Most Democrats have already drawn a red line on tax reform: 45 out of 48 Democratic senators signed a letter saying they wouldn't support any tax bill that adds to the deficit or offers new tax breaks to the wealthiest Americans.
• But Republicans are desperate for a win and appear on course to fund tax cuts with a blend of deficit spending and the closing of loopholes. They will dare Democrats, especially the 10 senators up for re-election in states Trump won, to vote against tax breaks for their constituents.

What's next: President Trump is planning to give a speech unveiling the Big Six framework in Indiana on Wednesday, three sources said. The framework is the starting point for the tax reform process. It reflects the shared view of the Big Six, but it will inevitably change substantially as it goes through the normal legislative processes in the House and Senate.

(The "Big Six" are House Speaker Paul Ryan, Senate Majority Leader Mitch McConnell, Treasury secretary Steven Mnuchin, White House economic adviser Gary Cohn, and the chairmen of the two tax-writing committees — Senate Finance Committee chairman Orrin Hatch and House Ways and Means chairman Kevin Brady.)

The details, per three sources with knowledge of the plan:

• Top individual tax rate cut from 39.6 to 35. The current seven income tax brackets collapsed to three, as part of simplification. (Axios hasn't obtained the other two rates.)
• Axios can confirm that the Big Six agreed to cut the corporate tax rate from 35 percent to 20 percent. That key detail leaked last night to the Washington Post. (Trump has said he wants the corporate rate to be 15 percent.)
• The Big Six framework is also expected to include guardrails to prevent wealthy people from artificially lowering their income taxes by rearranging their affairs to get taxed at the small business rate.
• We can confirm, too, WashPo's reporting that Republicans plan to double the standard deduction — a boost for the middle class and a key component of simplification.

These Big Six decisions have been held incredibly tightly, but details began leaking out around Capitol Hill on Friday night and the corporate rate was first published by the Washington Post's Hill team. By Saturday, influential figures on K Street were beginning to learn more details.

Some problems the Big Six could run into:

• The National Federation of Independent Business (NFIB,) the leading small business association, wants to equalize the small business rate and the corporate rate. Under the current plan, that's not happening. The corporate rate will be 20 percent and the small business rate 25 percent. "That's going to be controversial, but it's not a deal-breaker I don't think," said a source close to the process.
• House conservatives — especially the Freedom Caucus — haven't been involved in the Big Six discussions and they want the corporate rate to be much lower, at 16 percent. Republican leaders say there's no way that's going to happen, and Treasury Secretary Mnuchin agrees.
• The Trump tax plan will likely add to deficits, at least in the short term, which will bother some deficit hawks. But tax reform advocates were heartened when, just this week, Senate Republicans on the Budget Committee cut a deal that would reduce government revenue by as much as $1.5 trillion over 10 years. Republicans argue that, with economic growth spurred by the tax reform, there'll be substantially less lost revenue than $1.5 trillion.
• Realtors and home builders won't be happy with the doubling of the standard deduction. That's because lots more people will take the standard deduction and many fewer will itemize their tax returns. A prevailing belief in the real estate world is that under those conditions, fewer people will take the mortgage interest deduction, which could mean fewer homes being purchased.
• Whichever groups are hit up for the "pay-fors" — the loopholes being closed — will inevitably form lobby groups and oppose those elements of the plan.

[lee martell]

Sounds good. This should make people like Matt Drudge and Jamie Dimon (EO for JP Morgan-Chase) happy.

[SgtHooper]

Not impressed.

[SaxxonWoods]

Congress is going to do something?

I’ll believe it when it’s done.

[Arthur McGowan]

Pathetic, measly rate cuts.

[a fool in paradise]

How about tying the corporate tax rate cut to the abandonment of worker visas and offshore technology teams?

[aMorePerfectUnion]

If slavery involves the theft of 100% of the value of your labor,
the GOP thinks you should be 35% enslaved.

[Basket_of_Deplorables]

McCain or Cruz will kill it.

[fluffy]

On the contrary, it’s an amazing cut for the people who matter. It won’t cut much from bureaucrats and administrators who pull in $600k/year to sit on a diversity board, but successful small business owners (who actually contribute to the economy) will see a top rate reduction from 40% down to 25%. That’s substantial.

As the sole proprietor of a successful small business I’m very excited. Not that I believe the cut will actually pass (given recent history), but it’s definitely not a pathetic cut.

[SeekAndFind]

RE: McCain or Cruz will kill it.

Why specifically these two?

[SeekAndFind]

RE: Not impressed.

What would you prefer?

[SeekAndFind]

RE: Pathetic, measly rate cuts.

What should it be to not be pathetic/measly?

[LostInBayport]

The current seven income tax brackets collapsed to three, as part of simplification. (Axios hasn't obtained the other two rates.)

We can confirm, too, WashPo's reporting that Republicans plan to double the standard deduction — a boost for the middle class and a key component of simplification.

Those two points, assuming the "other two rates" present a decrease in rate for the average Joe (yours truly), have me interested.

[sevlex]

I have changed my libertarian opinion on tax rates. It seems the oligarchs have been causing too much mischief with their billions.

Because of this the top bracket should be 75%.

[Regulator]

How bout we divide by 10 and get it down to 3.5%.

Better yet, just kill the disgusting tribute to the government-bankster class called the “income tax” and go back to equalizing tariffs and straight excise taxes.

That will make them pay attention and make sure the business conditions are good or else they won’t make a damn thing.

Like the rest of us.

[Jonny7797]

If that’s it, I’m not impressed.

[Sarah Barracuda]

Tax those NFL, NBA, and liberal celebrities 80 percent watch them cry like lil p*ssies

[Nifster]

It’s certainly a start IF true

Axios is a useless source

[conservative98]

Until McCain, Rand Paul, Collins, Murcowski, Cruz, Lee, et all say it is not good enough for them and kill tax cuts.

[Navy Patriot]

Trump, GOP to cut top individual rate to 35%, Corporate tax rate from 35% to 20%.

This is one step that will work and even start to draw in the crony capitalist Fascist corporation that have gone over to the Rats and RINOs. They will get on board for the money.