Tax Reform Phase Two May Include Corporate Tax Rate Cut (article)

Tax Reform Phase Two May Include Corporate Tax Rate Cut (article)

Home /  Insights / Articles / Article Details

Tax reform phase two may include lowering the corporate tax rate, according to President Donald Trump. Republicans are "thinking about bringing the 21 percent [corporate tax rate] down to 20," Trump said in a televised interview aired on July 1. "Then, for the most part, the rest of it would go right to the middle class," he added.

Corporate Tax Cuts

The corporate tax rate was lowered from 35 to 21 percent last December under the Tax Cuts and Jobs Act (TCJA). Originally, the White House and many congressional Republicans called for an even lower corporate tax rate.

Trump originally proposed a 15 percent corporate tax rate, and earlier drafts of the GOP tax reform bill proposed 20 percent. However, under the reconciliation process, Senate budget rules limited how much Republicans could cut the corporate tax rate.

Individual Tax Cuts

The next round of tax reform will focus on making permanent the individual tax cuts enacted under the TCJA temporarily through 2025. Brady has said that extending the tax cuts will be the "centerpiece" of a phase two bill.

Phase Two Timeline

House Republicans are expected to see a legislative outline of the phase two bill in July. "I expect to see the legislative outline released [publicly] in early August, with votes in the fall…," Brady has said.

Likewise, Trump predicted in the July 1 televised interview that the tax reform phase two measure would be taken up in October, or "maybe a little sooner than that." Brady has said that a phase two package with two or more bills is expected.

Senate

At this time, another major tax bill clearing the Senate this year is considered unlikely on Capitol Hill. The reconciliation process allowed the TCJA to be approved last year with a simple GOP majority, receiving zero Democratic votes. However, Brady has said that specific legislative path is not an option this time around.

Under regular order, legislation must meet a 60-vote threshold in the Senate. Currently, the phase two measure would need at least nine Democratic votes to clear the chamber.

Democratic Support

Democrats have remained largely united in their opposition toward the TCJA. However, many Republicans remain hopeful that a vote on making permanent individual tax cuts, just prior to midterm elections in November, may garner enough Democratic support.

 


Copyright © 2018, CCH INCORPORATED. All Rights Reserved. Contents of this publication may not be reproduced without the express written consent of CCH and CBIZ. To ensure compliance with requirements imposed by the IRS, we inform you that—unless specifically indicated otherwise—any tax advice in this communication (and any attachments) is not written with the intent that it be used, and in fact it cannot be used, to avoid penalties under the Internal Revenue Code, or to promote, market, or recommend to another person any tax related matter. This publication is distributed with the understanding that CBIZ is not rendering legal, accounting or other professional advice. The reader is advised to contact a tax professional prior to taking any action based upon this information. CBIZ assumes no liability whatsoever in connection with the use of this information and assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

CBIZ MHM is the brand name for CBIZ MHM, LLC and other Financial Services subsidiaries of CBIZ, Inc. (NYSE: CBZ) that provide tax, financial advisory and consulting services to individuals, tax-exempt organizations and a wide range of publicly-traded and privately-held companies.

Tax Reform Phase Two May Include Corporate Tax Rate Cut (article)Additional changes may be coming to the tax code this fall....2018-07-03T14:45:42-05:00

Additional changes may be coming to the tax code this fall.