Why the Top Corporate Tax Rate May End Up Higher Than 20 Percent

Why the Top Corporate Tax Rate May End Up Higher Than 20 Percent

President Trump’s reference to a 22 percent tax rate for businesses last weekend left some analysts scratching their heads, since the White House and numerous lawmakers had signaled that the proposed 20 percent corporate rate is not open to negotiation. But Roll Call reports that the 22 percent rate is being discussed behind closed doors in Congress this week, and it’s looking like a slightly higher corporate tax rate is a distinct possibility, though by no means a done deal.

The higher rate could help solve some of the problems the tax negotiators are facing, such as paying for a more generous state and local tax deduction and fully repealing the corporate alternative minimum tax, which together could cost hundreds of billions in lost revenues.

Each percentage point increase in the corporate tax rate raises about $100 billion over 10 years, potentially providing a much-needed source of cash as the tax bill scrapes up against fiscal limits set by the Senate. 

But don’t expect the higher rate to happen without a fight. Several House Republicans have said they will push to maintain the 20 percent rate. Sen. Shelley Moore Capito (R-WV) agreed, saying, “I’ve already voted for 20, I’d like to keep it there and I think that’s probably the prevailing thought.”