Apr 24, 2017 - Politics & Policy

Trump's budget-busting ask on corporate tax rates: 15%

Andrew Harnik / AP

The Wall Street Journal scoops that President Trump privately told staff he wanted them to prioritize massive tax cuts even if they add to the deficit. Trump, who wants to slash the corporate rate to 15%, reportedly made the comments in an Oval Office meeting last week.Why this matters: We told you recently about the "candy option" for tax reform — all the goodies, with none of the pain. Nothing says "candy" like offering huge tax cuts with no new revenue streams to pay for them. A top Senate source said Trump's tax plan could easily blow a $3 trillion hole in the budget, if he does massive cuts and includes the "Ivanka credit" for childcare.A few problems: Most Republicans won't stand for a plan that makes them look fiscally reckless. Also, it's hard to see how such major cuts would become permanent. The Republicans will likely use a "reconciliation" bill to pass tax reform. This has the advantage of being able to pass the Senate with 51 rather than 60 votes, but its rules dictate that for the cuts to last beyond 10 years they can't add to the deficit. It's difficult to see how even the most optimistic economic growth projections could make up for that loss of income.Between the lines: It's all but official that the so-called "border adjustment tax" is dead. It's the centerpiece of Paul Ryan's House Republican tax plan, and it would raise more than $1 trillion over 10 years by hiking taxes on imports. Nationalists in the White House, including Steve Bannon, love the idea. They see it as an American nationalist tax — hindering foreign importers and helping companies that build stuff in America. But it looks like opponents of the idea, a group that includes about the entire U.S. Senate, have won on this one.

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