Steve Rosenthal with the Urban-Brookings Tax Policy Center in Washington, D.C., wrote on Oct. 23 that President Trump’s tax cut proposal of reducing the corporate tax rate will result in an annual $70 billion windfall tax savings for foreign investors.
Instead of reducing the rate by more than 42 percent in a single year (from 35 percent to 20 percent), I propose that the tax rate be reduced by approximately 10 percent per year for five years (31.5 percent in 2018; 28.4 percent in 2019; 25.6 percent in 2020; 23.1 percent in 2021.)
In the fifth year, the corporate tax rate would be 20.8 percent. During a five-year phase in period, the foreign investors’ windfall tax savings would be reduced by $137 billion.
By spreading the tax cut over five years, the federal deficit would increase by only $608 billion as opposed to $1 trillion if the entire tax cut is implemented in a single year. During this phase-in period, Congress will be able to determine if the corporate tax rate cuts really benefit middle-income taxpayers or only high-income taxpayers and foreign investors.
If not, the corporate tax cut should be rescinded to prevent the mushrooming of the federal deficit after 2022.
Rick Herman, Fresno