27 April 2017

  |  CBI America


Trump administration releases tax plan

One of the most high profile policy promises made by the President on the campaign trail was ambitious tax reform. This month, the administration released an outline of what that might look like. 

Trump administration releases tax plan

While it is Congress that will draft the legislation, President Trump’s team released an outline of what they want tax reform legislation to look like this month. There has been intense debate over what would and wouldn’t make it into the President’s preferred tax plan and the outline answers some of those questions. 

Under the proposal, the headline rate of corporation tax would be cut from the existing 35% to 15%. Businesses whose structure means they currently pay the individual tax rate would also be eligible for the 15% rate. A point of debate here is the impact these cuts could have on the deficit, and over what period of time those effects would be realised. 

Moreover, the hotly debated border adjustment tax that featured in the House blueprint published last year, looks not to have made it into this proposal. The border adjustment tax would have been a revenue raiser, with the view to offset cuts elsewhere. However, some members of Congress argued it would increase prices for consumers shopping at retailers who import large quantities of their products from abroad. 

The plan also proposes a ‘tax holiday’ to incentivise businesses to move profits currently held overseas back to the U.S., although the tax rate that would be applied in this scenario was not specified. 

Further details will emerge over the coming months, and the administration has signalled they would like to get tax reform legislation completed this year. The business community will be watching this space closely as developments unfold.