Hours after Senate GOP passes tax bill, Trump says he’ll consider raising corporate rate
Hours after the pre-dawn passage of a $1.5 trillion tax cut, President Trump suggested for the first time Saturday that he would consider a higher corporate rate than the one Senate Republicans had just endorsed, in remarks that could complicate sensitive negotiations to pass a final bill.
On his way to New York for three fundraisers, Trump told reporters that the corporate tax rate in the GOP plan might end up rising to 22 percent from 20 percent.
Lawmakers in both the House and Senate had fought hard to keep the corporate rate low, with the Senate late Friday rejecting a Republican-backed proposal to push it up to 21 percent in exchange for more working-family tax breaks.
The Senate passed the final version of its bill on a 51-to-49 vote just before 2 a.m. Saturday, with Sen. Bob Corker (Tenn.) as the lone Republican voting against it on concerns that it would drive up the federal deficit. Democrats howled that the bill was not released until hours before passage, with lobbyist-driven handwriting still present on the final version.
Senate Republicans moved fast, in part, because they wanted to comply with Trump’s demand to send legislation for his signature by the end of the year.
The House and Senate intend to take steps as soon as Monday to set up a conference committee to negotiate the significant differences between the Senate plan and the version passed by the House last month. But Trump’s statement Saturday threatened to introduce a complication.
“Business tax all the way down from 35 to 20,” Trump told reporters, remarking on a core provision of the Senate bill. “It could be 22 when it all comes out, but it could also be 20. We’ll see what ultimately comes out.”
Moving the corporate tax rate up by 2 percentage points could raise $200 billion, money Trump might need to try to satisfy the concerns of Republicans frustrated that the plan does not reduce top individuals’ tax rates enough or of others such as Sen. Marco Rubio (Fla.), who argued that the bill should do more for low-income families.
Rubio complained Friday that colleagues would not even allow him to move the corporate rate to 20.94 percent, saying they acted as if this would be a “catastrophe.”
If the White House tries to lower the top tax rate for individuals, it would mark a sharp departure from several months ago, when then-chief strategist Stephen K. Bannon advocated for raising the top rate paid by the wealthiest Americans as a way to follow through on the populist principles Trump invoked in his campaign.
Lowering the corporate tax rate was a centerpiece of the plan, and Republicans have said that it will help businesses free up money to invest, grow and raise wages. They continually reshaped the tax-cut bills in the House and Senate to help businesses, even if it meant cutting back on tax benefits for individuals and families.
Senate Majority Leader Mitch McConnell (R-Ky.) dismissed suggestions that the corporate rate could rise to 22 percent, pointing to votes in both the House and Senate that would set it at 20 percent. “That would be a major change,” McConnell said in a telephone interview, adding that the vote showed he does not “have much of a margin.”
House conservatives have strongly opposed a higher corporate rate, with Rep. Mark Meadows (R-N.C.), chairman of the Freedom Caucus, saying that anything above 20 percent would be unacceptable. It remained to be seen how the president’s endorsement of a higher rate might impact their stance.
“The Freedom Caucus was the first to embrace the president’s call for a 15 percent corporate rate and has been consistent in its position, calling for a rate as low as possible but no higher than 20 percent,” Meadows said in a text message. “I am certain he will be signing a tax relief package by Dec. 21, which will meet the pro-growth standard the Freedom Caucus has demanded for many months.”
Saturday’s vote was a bright victory for Trump amid the political troubles facing the White House on other fronts, as well as for Republicans after the collapse of their efforts to repeal the Affordable Care Act.
Business groups welcomed the Senate vote, which moved them a major step on the way to their long-standing goal of lower corporate taxes. The current U.S. statutory rate of 35 percent is the highest among major industrial economies, though many corporations pay a far lower rate.