The United States needs to “get in line with the rest of the world” and cut its corporate tax rate to at least 23 percent to “make us competitive” and spur capital investment, National Economic Council Director Gary Cohn said August 4.
“We have to do something structural to the U.S. economy,” Cohn told Bloomberg TV. “We cannot be substantially higher than the OECD average tax rate out there.”
The average rate for other OECD countries is 25 percent, according to the OECD’s tax database.
The Trump administration has consistently called for reducing the U.S. corporate tax rate to 15 percent, an objective that was repeated as recently as July 31 by White House Director of Legislative Affairs Marc Short. Cohn, however, has signaled a more flexible stance on the corporate tax rate, telling a group of real estate industry representatives July 31 that his goal is to cut it “to as low as possible” and that the administration is working with 15 percent as the starting point to see if it’s feasible.
Senate Finance Committee Chair Orrin G. Hatch, R-Utah, sounded even more skeptical recently, telling Reuters in a July 31 interview that it would be “kind of miraculous if we could get it down to 25 percent or less.”
The July 27 joint statement by the “Big Six” Republican leaders negotiating tax reform — including Hatch and Cohn — does not specify what the new corporate tax rate should be. Instead, it says only that there should be “lower rates for all American businesses so they can compete with foreign ones” and that tax rates should be reduced “as much as possible.”
The Big Six will continue to meet over the August recess and will “hopefully be able to deliver a comprehensive tax bill early in the fall,” Cohn said.
The White House did not respond to Tax Analysts’ request for comment by press time.