by Umar Farooq
With financial markets eagerly anticipating a White House tax plan, Trump will also call for a sharp cut in the top rate on pass-through businesses, including many small business partnerships and sole proprietorships, to 15 percent from 39.6 percent, an administration official said.
Trump’s primary goal appears to be lowering the corporate tax rate from 35 percent to 15 percent, according to the Wall Street Journal. It’s a drastic cut, and lower than the 20 percent rate proposed by House Republicans. The 15 percent rate alone could cost $2.4 trillion over 10 years, according to budget estimates. Lowering the corporate tax rate is a popular idea, particularly because the United States has one of the highest in the world. This has encouraged multinational corporations to shift billions of profits to lower-tax countries as a way to decrease their tax bill.
The only provision so far that will raise some money is a one-time 10 percent tax on foreign profits that US multinational corporations have stashed overseas. Right now, American companies have $2.6 trillion in untaxed income earned abroad — a move many use to avoid paying the 35 corporate tax rate. Trump’s “repatriation holiday” is supposed to encourage them to bring that money back at a lower tax rate, though there is no telling how many companies would do so.
One issue is that of a border adjustment tax. The tax is complicated, but the gist is this: “Companies would not be taxed on goods they export out of the United States, but would be taxed on goods they import into the US. It would fundamentally change how American businesses are taxed, prioritizing domestic production. This was a key part of the House Republican plan — and it was essential to raising revenue so the plan would pay for itself and comply with the complex Senate rules that allow Republicans to pass a bill with a bare majority in the upper chamber.” vox
As a result of President Trump’s commitment to the major issues facing small businesses—including taxes, regulations, and healthcare reform—the new JCN poll finds that nearly 60 percent of them believe that Trump “will have a positive effect” on their business, employees, and customers. This bodes well for the U.S. economy. There are 29 million small businesses in America, providing employment for roughly half of the U.S. workforce and impacting 85 million people in total.
In short, President Trump’s proposal to cut the tax rates will allow business owners to invest more of their resources in hiring, expansion, and their communities—keeping more money on Main Street rather than sending it off to Washington, D.C.
by Umar Farooq