President Trump’s tax reform announcement tomorrow reportedly will include a 20 percentage point cut in the top corporate income tax rate— from 35 percent to 15 percent. The U.S. corporate tax rate would go from among the highest in the developed world to one of the lowest—at least until other countries cut their own rates as they did after the Tax Reform Act of 1986. A low corporate rate would discourage multinationals from shifting profits to low-tax countries and could stimulate new investment. Combining a corporate tax rate of 15 percent with a top individual rate of 37 percent (another likely Trump proposal) would create a powerful incentive for wealthy people to squirrel away a large portion of their assets in a corporation. By tying a 15 percent corporate rate to individual income tax reforms, he could limit corporate tax avoidance.

Source: Forbes April 25, 2017 19:34 UTC