As part of his broader tax policy proposals, Donald Trump has repeatedly expressed his intention to reduce the corporate income tax rate to 15% for companies that manufacture products in the United States. This proposed reduction would be applicable to both domestic and foreign companies with manufacturing operations within the U.S.
However, the specific mechanisms for implementing this policy have not been fully detailed. It's been suggested that it could involve a reintroduction of a form of the Domestic Production Activities Deduction (DPAD) or a similar approach to reduce the effective tax rate for domestic producers.
It's
important to note the context surrounding this proposal:
· The current corporate
tax rate is 21%, a reduction from 35% under the Tax Cuts and Jobs Act of 2017
(TCJA).
· Trump has often linked
this proposed 15% rate for manufacturing to efforts to discourage companies
from outsourcing jobs and encourage them to bring manufacturing back to the
U.S.
· It's a key part of his overall strategy to prioritize American manufacturing and potentially impact global trade relations.
Potential
implications
· Attracting foreign
investment: The prospect of a lower tax rate for manufacturing could
potentially incentivize foreign companies to establish or expand their presence
in the U.S.
· Challenges and
complexities: The implementation of such a policy could be complex and may
require addressing potential issues related to how it interacts with
international tax agreements and trade policies.
· Impact on the federal budget: A reduction in the corporate tax rate, even if limited to manufacturers, could have implications for federal revenue and may necessitate finding ways to offset potential losses.
In summary, while the specifics are still being discussed, Trump has clearly indicated his intention to offer a 15% corporate tax rate for companies, including foreign ones, that manufacture goods in the U.S. This policy is aimed at boosting domestic manufacturing and attracting foreign investment, although its final form and overall impact are yet to be seen.
Will Trump grant a 15% corporate tax for foreign companies with plants already in the US ?
As of July 22, 2025, President Trump has signed the "One Big Beautiful Bill Act" (OBBBA) into law which includes several tax changes, including some impacting corporate tax rates
Specifically,
the OBBBA includes the following:
· 15% Corporate
Alternative Minimum Tax (CAMT): The Inflation Reduction Act
of 2022 (P.L.
117-169) imposes a CAMT of 15% on the adjusted financial statement income of
large corporations. This tax applies to both public and private corporations.
· Reduced Corporate Tax
Rate for Domestic Production: President Trump has stated his intention to
reduce the corporate tax rate from 21% to 15% specifically for companies
manufacturing within the U.S., as a way to stimulate domestic production. This
proposal aims to encourage domestic manufacturing and investment. The OBBBA
includes provisions for a new deduction under Section 168(n) for investments in
domestic factory property, with construction beginning after January 19, 2025,
and prior to January 21, 2029, and placed in service before January 1, 2031.
· Renamed and Modified
GILTI/FDII: The global intangible low-taxed income (GILTI) regime has been
renamed "Net CFC Tested Income" (NCTI), and the foreign-derived
intangible income (FDII) regime has been renamed "foreign derived deduction
eligible income" (FDDEI). The effective tax rate on NCTI is expected to
increase to 12.6% in 2026, or 14% with foreign tax credit utilization. The
effective tax rate on FDDEII is also expected to increase to 14% for tax years
beginning after December 31, 2025.
· Elimination of Section
899: A previously proposed controversial tax provision, Section 899, which
could have imposed high tax rates on foreign companies from countries with
"unfair taxes," was omitted from the final OBBBA legislation. This
omission may provide clarity and relief for international businesses and
investors.
· Other Provisions: The OBBBA includes various other changes to international and domestic tax law, including an increase in the BEAT rate to 10.5% and preservation of the ability to use US tax credits to offset BEAT liability, according to the Tax Foundation.
Please note: The exact implementation details of some of these provisions, such as the 15% corporate tax rate for domestic manufacturing, still require further guidance. Businesses are encouraged to consult with tax advisors to understand the full implications of the new tax laws on their specific situations.
Comments
Locating manufacturing plants in the US to make goods for US consumption will shorten supply chains and reduce transportation costs.
Norb Leahy, Dunwoody GA Tea Party Leader
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