Tax reform 2.0 may include lowering the corporate tax rate, according to President Donald Trump. Republicans are “thinking about bringing the 21% down to 20,” Trump said on July 1. “Then, for the most part, the rest of it would go right to the middle class.”
Corporate Tax Cuts
The Tax Cuts and Jobs Act (TCJA) lowered the corporate tax rate from 35 to 21 percent last December. The White House and many congressional Republicans had called for an even lower corporate tax rate.
Mr. Trump originally proposed a 15 percent corporate tax rate, and earlier drafts of the bill proposed 20 percent. The Senate reconciliation process budget rules limited how much Republicans could cut the corporate tax rate.
Individual Tax Cuts
Phase 2.0 of tax reform will focus on making permanent the individual tax cuts enacted, rather than let them expire in 2025. House Ways and Means Committee Chairman Kevin Brady from Texas has said that extending the tax cuts will be key.
Phase Two Timeline
Mr. Brady said “I expect to see the legislative outline released [publicly] in early August, with votes in the fall…” and Mr. Trump predicted that phase 2 would be taken up in October or sooner. Mr. Brady has said that a phase two package with two or more bills is expected.
At this time, it’s difficult to imagine another major tax bill clearing the Senate however. Legislation must receive at least 60 votes threshold in the Senate. Currently, the legislation would need at least nine Democratic votes. Democrats remain united in their opposition toward the tax reforms put forward by the GOP.