Trump tax plan could cost ‘whole categories of businesses’

Written by By Candice Choi, CNN

WASHINGTON — Amazon, General Motors and other big corporations would have to pay more in taxes under a plan recently proposed by an independent panel of experts, a report says.

The idea is to increase “fairness and equity in our income tax code,” said Veronica Frick, a professor at Stanford University Law School and co-author of the report.

On its face, the proposal — which is built on a framework proposed by President Trump last month — does not seem to create a particular tax burden on corporate America.

Instead, the report says it would impact “whole categories of businesses” and “every C-corporation,” which includes entities that are structured and treated as separate entities from the parent corporation.

Currently, corporations aren’t required to pay any federal taxes if they report at least $75,000 in income in a given year. For that reason, according to the experts, a company such as Amazon would not be caught up under the tax proposal.

The report says the deduction would be eliminated and an existing tax rate of 35% would be applied to corporations with more than $25 million in business income. GM would be subject to this tax under this proposal, the report says.

While the analysis was conducted by a panel of experts, the report says the Trump administration contacted them to share their analysis.

The tax plan Trump proposed last month would cut taxes to 20% from the current 35% rate for corporations and the top individual rate would also drop to 33%. But neither proposal does enough to close the corporate tax loophole, said G. William Hoagland, a senior vice president at the Bipartisan Policy Center, a Washington think tank.

“The likelihood that Amazon or General Motors would have to pay more is small,” Hoagland said. “Other businesses that aren’t massive or global … would not get affected.”

And according to the study, even companies that do operate from foreign countries would not be affected. According to the report, the tax structure in the proposal would only affect those that operate domestically.

More than 90% of the proposed tax revenue would go to middle-class and low-income Americans and a few billion dollars of revenue would go toward refunding the national debt.

The proposal was unveiled by Trump last month, and Trump and Republican leaders in Congress said they are pursuing a package of cuts that would go into effect in 2019.

Congress could ultimately choose to change parts of the proposal to go further, or move forward with a narrower tax overhaul without any corporate tax reforms.

The Tax Policy Center, a nonpartisan think tank, released a report on Monday estimating that the proposal would mean tax cuts for those at the top end of the income scale and higher taxes for middle-class Americans.

Critics say the rate cuts are overblown, and warn that leaving corporate taxes alone will lead to higher taxes for individuals, more reliance on debt to pay for it and ballooning deficits.

But despite the concern over deficits, the analysis says the Trump plan will have a positive fiscal impact over the next decade, because it would eliminate lots of tax breaks that could be used to soften the blow of other cuts.

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