15 percent gift...

Trump still pushing for a 15 percent corporate rate

The president is sticking with his target, even though advisers working on tax reform have told him it's not a workable figure.

By BEN WHITE and NANCY COOK

President Donald Trump is increasingly fixated on slashing the top corporate tax rate to 15 percent — a level that pretty much no one else working on the issue in the White House or Congress thinks is workable.

In a White House meeting on Tuesday, Trump again expressed his strong desire to hit the 15 percent target, from today’s 35 percent.

“You can’t get to 15 percent, and anyone who has a back of an envelope can make that calculation,” said a senior official working on tax reform. “And he may not like that truth, but it’s the truth. It’s just math.”

This debate over how low to bring the corporate rate as part of a larger overhaul foreshadows the difficulties the administration faces as it attempts to tackle tax reform, while also trying to raise the debt ceiling, pass a budget to keep the government funded, address immigration reform and dole out money for Hurricane Harvey relief.

Congressional leaders, tax writers and key administration officials known as the “Big Six” met Tuesday in the Oval Office to talk about their progress — largely as a way to publicly show momentum on an issue significant to Republicans, the business community and conservative activists.

On Wednesday, Trump plans to travel to North Dakota to makehis second tax sales pitch in a week. He will deliver a speech focused on the way tax reform will boost the financial lives of the middle class and help businesses.

Accompanying him on Air Force One will be North Dakota Sen. Heidi Heitkamp, one of 10 Democratic senators up for reelection in 2018 in states that Trump won. A key part of the administration’s strategy to push a tax package through Congress is to earn these members’ support.

In his speech, Trump is expected to bring up the fact that the 1986 tax overhaul under President Ronald Reagan was also a bipartisan effort, according to excerpts released by the White House.

“Both of the Reagan tax cuts were passed by a Democratic majority in the House, a Democratic speaker and the vast majority of Democrats in the Senate, including a Democratic senator from the great state of North Dakota,” the president intends to say. "If Democrats continue their obstruction, if they don’t want to bring back your jobs, raise your pay and help America win, voters should deliver a clear message: Do your job to deliver for America or find a new job.”

Treasury Secretary Steven Mnuchin and National Economic Council Director Gary Cohn will also join the president on the trip.

As in his speech in Missouri last week, Trump is not expected to go into specific details about proposed changes to the tax code beyond wanting to lower corporate and individual rates and allow companies to bring back money from overseas.

He’s expected to continue trying to make a populist-style push for tax cuts, arguing that they will encourage businesses to invest and hire more workers while making it less attractive to open manufacturing facilities abroad and ship products back into the United States.

Lost in much of this rhetoric is the way a major tax cut would help businesses and their bottom line.

Part of the challenge for the White House is crafting a major legislative package that can appeal to the fractured Republican Party in Congress, where hard-core conservatives and more moderate members often find themselves at odds.

“The key hurdle is very simple. It’s how to craft a package that can get 50 votes in the Senate and avoid the problems they had with Obamacare,” said Stephen Moore, an informal economic adviser to Trump and distinguished visiting fellow at the Heritage Foundation. “I still maintain they will end up with something really scaled back that can give the president a bill-signing ceremony.”

“The politics of the issue keep changing as to what is attainable here, but it’s time to get realistic about what we can pass,” Moore added.

Tuesday’s 45-minute Big Six meeting at the White House offered some hints of the difficulty of developing a major piece of tax legislation. The meeting was largely devoid of policy details — more of a show for the media than anything else, said one congressional source.

“This was mostly about procedure: How we get from point A to point B and make sure tax reform doesn’t get lost,” said one source familiar with the meeting. “That means the House has to start moving in September, because it takes the Senate awhile.”

Another issue that has cropped up in recent weeks is the state of play on the corporate tax rate.

Trump surprised some people closely following the tax reform process by publicly sticking with the 15 percent figure in his speech in Missouri last week.

“Ideally — and I say this for our secretary of the Treasury — we would like to bring our business tax rate down to 15 percent, which would make our tax rate lower than most countries, but still, by no means the lowest, unfortunately, in the world," he said. "But it would make us highly competitive.”

Most of the Big Six negotiators have come to the conclusion that the corporate rate will end up somewhere between 20 percent and 25 percent, despite the president’s insistence on lowering it to 15 percent, a key promise from the campaign trail.

The thinking is that lowering the rate to 15 percent is unattainable without introducing a major new tax, such as the border adjustment tax long favored by House Speaker Paul Ryan (R-Wis.) and Chairman of the Ways & Means Committee Kevin Brady (R-Texas).

Negotiators now must decide how hard to push on limiting expensing for capital investments and cutting into other current deductions to get that rate close to 20 percent. More immediate expensing and continuing to allow deductions for corporate interest, for instance, would mean pushing the top corporate rate closer to 25 percent.

“Where the rubber meets the road is how much you are willing to cut into all this stuff to get the number closer to 20,” said the administration official.

While Trump continues to push to get as low on the top rate as possible, he is mainly sticking to the 15 percent figure so as not to be “negotiating with himself,” said White House officials working on tax reform, and they expect the president eventually to endorse a plan that has a higher rate, probably closer to 20 percent or slightly higher.

Administration officials also cautioned against expecting any new detailed plan on taxes from the White House in the near term. Some on Wall Street began expecting those details after Mnuchin, in an interview on CNBC last week, appeared to suggest that a new blueprint would be coming soon.

Instead, the officials said that the Big Six have already agreed on the basic framework and that it would now be up to the “regular order” process in Congress, in which the tax writing committees take the framework and create legislation with specific details on rates and deduction changes.