GOP Plan To Cut Corporate Taxes Not Feasible Without Revenue Loss, Report Finds
WASHINGTON -- It will be hard for Republicans to attain their goal of lowering the top corporate tax rate to 25 percent if they want to pay for it solely by eliminating business tax breaks, a preliminary report by Congress' nonpartisan revenue scorekeeper suggested Wednesday.
The study by the Joint Committee on Taxation found that erasing corporate deductions and credits would save around $960 billion over the next decade, only enough money to lower the top rate to 28 percent. The current top rate is 35 percent.
The three biggest corporate tax breaks by far involve deductions for research and development and for products made in the U.S., and the ability of corporations to write off their costs of capital investment.
Democrats who requested the study said it shows that to reduce the rate further, the GOP could have to raise the tax burden on individuals or small businesses, or rely on unrealistically optimistic projections of federal revenue.
"The Republican tax plan would require wiping out every provision in our tax code that encourages domestic job creation, investment and innovation – and they are still 3 percent short of their goal," said Rep. Sander Levin of Michigan, top Democrat on the tax-writing House Ways and Means Committee. He said the study underscores the need to "look at the disturbing implications of what is being proposed."
Republicans countered that the joint committee considers the estimates to be very preliminary and noted that the study omitted the impact of erasing dozens of business tax breaks.
"Congressman Levin's support for higher taxes along with his blatant opposition to tax reform is well known," said Michelle Dimarob, spokeswoman for Ways and Means Chairman Dave Camp, R-Mich. She said Levin's request for the study was a "political stunt," and said the business community strongly supports trading tax breaks for lower rates.
Camp has said he wants to lower the top corporate rate to 25 percent, but has yet to release a detailed plan for getting there.