US Corporate Tax Review 6-24-25

Whether the U.S. corporate tax rate will decrease in the near future is a subject of ongoing debate and legislative action. Here's a breakdown of the current situation and potential future trends: 

Current Situation:

·       The U.S. corporate tax rate was permanently lowered from 35% to 21% by the Tax Cuts and Jobs Act (TCJA) of 2017. This reduction aimed to make the U.S. more competitive globally and stimulate economic growth.

·       Despite some arguments that the lower rate would lead to increased wages and investment, studies have shown mixed results, with some suggesting benefits were concentrated among higher earners. 

Potential Future Changes:

·       While the 21% rate is permanent, it's not immune to change, and discussions about possible adjustments are ongoing.

·       Republican proposals: Some Republicans, like former President Trump, have expressed interest in further lowering the corporate tax rate, potentially to 15% for companies that manufacture products in the U.S.. Some House Republicans have even suggested a potential increase to 25% to offset other tax cuts.

·       Democratic proposals: Democrats, including Vice President Kamala Harris, have advocated for raising the corporate tax rate, with proposed rates reaching 28%. This aligns with past proposals from the Biden and Obama administrations.

·       Budget Reconciliation: The budget reconciliation process, which allows tax measures to pass the Senate with a simple majority, is a potential avenue for enacting new tax cuts, possibly including changes to the corporate rate.

·       The "One Big Beautiful Bill": Legislation like the House Budget Committee's proposed "The One, Big, Beautiful Bill" could bring about significant tax changes, including potential modifications to the corporate tax rate.

·       Tariffs: Proposed or implemented tariffs can also indirectly impact the overall tax landscape and revenues. 

Factors Influencing the Decision:

·       Economic Impact: Lawmakers will likely consider the potential effects of any rate change on the U.S. economy, including economic growth, investment, and employment.

·       Federal Deficit: Concerns about the federal deficit and the need to offset potential revenue losses from tax cuts will play a significant role in the debate.

·       International Competitiveness: The changing global tax landscape, including the movement towards a global minimum tax, could influence decisions about the U.S. corporate rate. 

Conclusion:

While the 21% corporate tax rate is currently permanent, it's subject to potential changes due to ongoing discussions and legislative efforts in Congress. The possibility of a decrease exists, particularly under Republican proposals, but it's intertwined with considerations of economic impact, the federal deficit, and international tax policy. The ultimate outcome will likely depend on the political climate and the ability of lawmakers to reach a consensus on tax reform. 

https://www.google.com/search?q=will+the+us+corporate+tax+rate+for+us+companies+go+down

Norb Leahy, Dunwoody GA Tea Party Leader