US corporate tax reform negotiators step back from Trump's 15% pledge

US President Donald Trump campaigned on cutting the US

corporate tax rate to 15 percent, but administration officials said on

Monday negotiators engaged in closed-door talks are now shooting for a

little over 20 percent because they realize the super-low rate would

balloon the federal deficit.

Republican leaders in

the House of Representatives and the Senate are unlikely to allow the

budget deficit to grow, so officials said they now hope for a corporate

tax at the low end of a 20-percent to 25-percent range.

"It's

going to be truly deficit-neutral," House Ways and Means Committee

Chairman Kevin Brady told reporters. "We're going for permanence. That

means our reforms have to balance in the budget."

Six months into Trump’s presidency, Republicans who

control the House, Senate and the White House have yet to agree on

important features of a tax code overhaul. Under Senate rules,

Republicans who want to take advantage of their simple majority and pass

tax legislation without Democratic support must show the new policies

will not add to the federal deficit after 10 years.

Cutting

the corporate tax rate to 15 percent from the current 35 percent would

cost more than 2 trillion US dollars over a decade, according to

independent analysts, and that total would be hard to offset when

proposals to raise revenue face broad political opposition.

"I

don't think there are 2 trillion US dollars of politically saleable

offsets on the corporate side of the ledger," said Rohit Kumar, a former

aide to Senate Republican leader Mitch McConnell who serves as a

principal in the tax policy group at the consulting and accounting firm

PwC LLP.

Two House Republican proposals could help pay for such a

reduction: a border adjustment tax and a proposed elimination of

business deduction of debt interest payments. But these face broad

opposition from industry and many Republican lawmakers.

Administration

officials hope the negotiators will agree on a plan by the end of July,

convert it to legislation during August, unveil it in September and

have Trump sign it into law well before the end of 2017.

Independent

analysts and lobbyists say a more likely timeline would see the release

of tax legislation in October or November and a vote in early 2018.

The

negotiators, Brady, Treasury Secretary Steven Mnuchin, White House

economic adviser Gary Cohn, House Speaker Paul Ryan, Senate Republican

leader Mitch McConnell and Senate Finance Committee Chair Orrin Hatch,

have yet to agree on a new corporate tax rate or how to pay for tax

cuts.

They also have yet to agree on which tax breaks to

eliminate or whether to include a controversial border tax on imports.

They want to end taxation on the foreign profits of US multinational

corporations and must agree on a measure to stop US corporations from

moving headquarters and shifting profits overseas.

Lobbyists say the group is likely to consider a minimum tax on foreign corporate earnings as an alternative to the border tax.

Some

Republicans in Congress acknowledge that it will be a challenge to

identify tax code changes that can unite party factions now battling

over healthcare and a fiscal 2018 budget that includes a legislative

tool crucial for passing tax legislation without Democratic votes.

"The

question is, can we get a framework that has a chance of passage? And

the answer to that is, we'll see," Hatch told reporters after taking

part in a principals meeting last week.