President Donald Trump’s plans for ambitious changes to US tax rules, including slashing the rate of corporation tax and introducing a one-off repatriation tax for multinationals with profits held offshore, are now likely to take longer to implement than previously expected
US Treasury secretary Steven Mnuchin has said the original target of getting the tax reforms through Congress before August is now ‘highly aggressive to not realistic at this point’, citing the President’s difficulties in getting agreement over planned changes to healthcare as part of the reason for the delay.
Mnuchin maintained he still expected the tax system to be reformed in 2017. One of the most contentious elements of the Trump plans is the ‘border adjustment tax’ which would apply to US companies importing products, although Mnuchin has indicated that this is still under consideration.
If the border tax adjustment does not go through, commentators suggest this would result in a $1 trillion deficit in current Republican tax plans over 10 years. Mnuchin indicated that the aim was still to ensure that any tax reforms were deficit-neutral, saying a strong US economic growth rate could be sufficient to address this, by generating more revenue.
‘Economic growth creates lots of revenues. When you calculate whether it is deficit-neutral or not, there are a bunch of different calculations and a bunch of models. I am just pointing out the magnitude of what economic growth does.’ Mnuchin said.
