U.S. Markets closed

Trump tax advisers to brief U.S. Congress leaders on plan

(Adds meeting under way, New York Times report, Clemente comment)

By Amanda Becker and Ginger Gibson

WASHINGTON, April 25 (Reuters) - U.S. President Donald Trump's two tax policy chiefs went to Capitol Hill on Tuesday to meet with top lawmakers as Washington dug for details on an impending Trump tax plan while financial markets watched closely.

The plan, due out on Wednesday, was expected to include only broad principles of tax changes, not formal legislation, and a proposal to slash the U.S. corporate income tax rate, with other components still the subject of much speculation.

The Wall Street Journal reported that Trump's plan will include a sharp cut in the top tax rate on pass-through businesses, including many small business partnerships and sole proprietorships, to 15 percent from 39.6 percent.

Some Washington policy analysts viewed the White House plan as likely to fall well short of a full-scale tax reform and as damaging to prospects for a thorough tax code overhaul in 2017.

Since it will clash in some ways with a broader tax plan shaped months ago by House of Representatives Republicans, the Trump document may complicate the consensus-building needed for full tax reform, a political feat not accomplished since 1986 when President Ronald Reagan pulled it off, they said.

Others said tax reform's chances will not be greatly frustrated. One veteran tax lobbyist said Congress and the White House still were likely to strike a tax deal this year.

Lawmakers were waiting to see whether Trump will include items that could attract Democratic votes, such as a proposal to fund infrastructure spending or a child-care tax credit as proposed by his daughter Ivanka.

Treasury Secretary Steven Mnuchin and National Economic Council Director Gary Cohn, both veterans of investment bank Goldman Sachs, went to the office of Senate Republican leader Mitch McConnell where they all met with House Speaker Paul Ryan and the chairmen of the Senate and House tax committees - Orrin Hatch and Kevin Brady, respectively.


Trump has struggled to advance his domestic agenda, including on taxes, even though his Republican Party controls both chambers of Congress. With his 100th day approaching on Saturday, he has yet to offer formal legislation to Congress or win passage there of a major bill he favors.

He has directed aides to move quickly on a plan to cut the income tax rate paid by public corporations to 15 percent from 35 percent, a Trump administration official said on Monday.

Separately cutting the top tax rate for pass-through businesses, which account for most U.S. companies, could benefit Trump himself, said Frank Clemente, executive director of Americans for Tax Fairness, a Democratic activist group.

"In trying to slash taxes for pass-through business entities, Trump is seeking to dramatically reduce his own tax bill," he said in a statement.

Analysts said the Trump plan also could cap the individual top tax rate at 33 percent, repeal the estate and alternative minimum taxes, and cut taxes for the middle class.

Importantly, the Trump plan was not expected to include any specific proposals for raising new revenues to offset revenue losses resulting from tax cuts. Mnuchin has said Trump's tax plan will pay for itself by stimulating economic growth.

The House Republican plan, championed by Ryan and Brady, did include such "pay-fors," including a proposed "border adjustment" tax that would favor exports and discourage imports. Analysts said the "border adjustment" tax was not expected to be in Trump's document and the New York Times reported that border adjustment was indeed left out of the Trump plan.

The Ryan-Brady plan proposed a 20 percent corporate tax rate. Many U.S. corporations, especially large multinationals, already pay well below the statutory 35 percent tax rate but have been campaigning for a formal rate cut for many years.

Trump's plan also may include a proposal to let multinationals bring foreign profits being held abroad into the United States at a steeply discounted income tax rate, another long-standing goal of the corporate tax lobbying community. (Additional reporting Richard Cowan and Susan Cornwell; Editing by Kevin Drawbaugh and Bill Trott)