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Evan Vucci / AP

Sources familiar with the Republican tax negotiations say there's an acknowledgment within the working group that setting the corporate rate at less than 25 percent may be unworkable if the tax reform is going to be revenue neutral.

Why it matters: This is far from the number the administration wants, but a source familiar with the discussions said it's a simple numerical cash problem. They've done away with the border adjustment tax, health care repeal is failing, and there are no politically-palatable alternatives to fill more than $1 trillion in missing revenue.

None of this is to say that Trump has given up on radical tax cuts. He wants the federal corporate rate to move from 35 to 15 percent, and top economic adviser Gary Cohn and Treasury Secretary Steven Mnuchin want cuts of historic proportions. Neither Trump adviser is especially concerned about adding to the deficit in the short-term. The problem is finding the votes for that in Congress.

What we're hearing:

From a source close to Republican leadership: "I don't even know how they get to 25 [percent]! It costs about 110B per point. So, they need to come up with about 1.1T to do a ten point cut."National Economic Council spokeswoman Natalie Strom: "Discussions between the White House and Congress are progressing in a very positive direction. We have always had more areas of agreement than disagreement and we feel confident we will develop a unified plan that will deliver on our goals of economic growth and tax relief for hard-working middle-income families. Decisions are best made through discussions with Members of Congress and staff, not hashed out in the press, and that's exactly what we're doing."A source who recently met with White House tax officials: Their mood as one of "irrational optimism." The source said the reality is they're still having immense problems finding revenues, and figuring out how to eliminate incentives for US companies to park money overseas.A senior administration official believes the impending collapse of health care negotiations will create a sense of urgency among members to ram through tax cuts before the 2018 midterms. He also thought health care's probable failure meant the administration would have a better chance at convincing fiscally cautious Republicans to abandon their demand that tax reform cannot add to deficits.It appears the BAT — a centerpiece of the House GOP tax plan — has had its funeral. An administration official involved in the tax reform effort said there's no point even including it as a topic of conversation.

Go deeper

Officer who shot Ashli Babbitt during Capitol riot won't face charges

Gary Phaneuf, Tony Naples and Melody Black visit a memorialon Jan. 7 near the Capitol Building for Ashli Babbitt. Photo: Joe Raedle/Getty Images

The Capitol Police officer who fatally shot Air Force veteran Ashli Babbitt on Jan. 6 as she joined a pro-Trump mob ransacking the Capitol will not face criminal charges, the Justice Department said on Wednesday.

Driving the news: In their investigation, federal prosecutors were unable to prove that the officer was not acting in self-defense or acting to defend members of Congress.

Dan Primack, author of Pro Rata
29 mins ago - Economy & Business

Coinbase opens at $102 billion valuation on first day of public trading

Illustration: Sarah Grillo/Axios

Cryptocurrency exchange Coinbase opened trading on Wednesday at $381 per share, giving it a fully diluted market value of around $102 billion.

Why it matters: This is a slight premium to the most recent private trades for Coinbase stock, and more than 50% higher than the reference price set last night by the Nasdaq.

1 hour ago - World

U.S. intelligence expects a stormy year in the Middle East

A technical team explodes remnant ammunition near Sirte, Libya. Photo: Mohammed Ertima/Anadolu Agency via Getty

Ongoing conflicts, economic crises and the fallout from COVID-19 will likely destabilize several countries in the Middle East in 2021 and could even put some on the brink of collapse, according to the U.S. intelligence community's annual Threat Assessment Report, released on Tuesday.

Why it matters: The report is the most comprehensive assessment the intelligence community produces every year. It paints a portrait of conflicts, insurgencies, terrorism and protest movements across the Middle East.