The White House of Friday floated the idea of a massive corporate tax cut for U.S. companies that bring their operations back from other countries.
“Why not provide a 50% discount for the corporate tax rate if you’re moving from outside the U.S. to the U.S.?” Larry Kudlow, director of President Trump’s National Economic Council, told reporters. “So, the rate is 21%. Why not try for a couple of years or longer, a 10.5% rate, which would make us extremely competitive and hospitable to new investments here?”
White House officials have begun studying the idea, but have not yet circulated a formal proposal, The Washington Post reports.
Kudlow reportedly also said that officials could explore suspending capital gains taxes on assets bought between now and the end of the year.
The 2017 Republican tax law cut the corporate income tax rate from 35% to 21%, which led to a steep decline in corporate tax receipts. House Democrats aren’t likely to go along with the idea of further cuts. Lawmakers have also largely dismissed President Trump’s repeated calls for a payroll tax holiday, and economists have questioned how effective tax cuts would be in addressing the pandemic.
Kudlow’s suggestion is "like trying to graft supply-side Reaganism onto conservative populism,” Samuel Hammond, a policy expert at the center-right Niskanen Center think tank, told the Post. “A lower corporate tax rate probably won’t suffice to build an entirely new factory within U.S. borders.”
