The Trump administration is privately discussing a corporate tax rate in the 20 percent to 25 percent range, according to administration officials and other advisers, aiming for a more realistic goal to notch a major policy win after its health care struggles.
The administration initially rolled out a rough outline for a tax overhaul in April by mirroring its campaign pledge to cut the corporate rate to 15 percent from 35 percent. Since then, President Donald Trump has been peppering CEOs, aides and others in the business world with questions about how low the rate would need to be to help companies grow.
Some executives and business lobbyists have cited a rate in the 20s, one White House official said, and that has become a prevailing view among a number of senior officials and advisers.
"He is convinced the corporate rate is the only thing that really matters," the official said, even though other aspects of the plan could determine how low the rate can go.
The White House is pushing tax reform as a policy area that it thinks it can drive and win. The president himself is engaged on the issue "far more than health care," this person said.
The dynamics of the internal discussions on tax policy still could change, and the administration for now is publicly maintaining its 15 percent target.
“The president set out the 15 percent as an ambitious goal post," said another senior administration official, acknowledging that the final number could wind up significantly higher. The intent of that approach was to start negotiations from a very low rate and hope to wind up somewhere close to 20 percent, which is the rate House Republicans have proposed.
The White House and top congressional Republicans, mindful of mistakes that brought their Obamacare repeal efforts to the brink of failure, are taking a more methodical approach to tax reform in hopes of presenting a united front when legislation is rolled out.
A group of senior administration officials and leading lawmakers known as the Big Six is trying to dispose of tax reform’s big-picture questions, after seeing messy policy fights plague the health care push.
Top Trump administration officials have been holding listening sessions for months with a range of interest groups. Trump is expected to hit the road next month to sell the GOP tax reform plans — which critics on the left have derided as a giveaway to the most fortunate — to his more blue-collar base. "I think you should always have a sense of urgency and start by helping people understand the why, and then the how gets clearer," said Sen. Tim Scott (R-S.C.).
Those involved and watching the tax reform process caution that there’s still a very good chance that Republicans could fail to overhaul the tax code. The Senate GOP’s health care difficulties illustrate how difficult it can be to get 50 out of 52 Republicans on board with major policy overhauls, and polls suggest that Trump’s tax framework isn’t very popular with voters.
Plus, many interest groups currently cheering the Republicans’ approach on tax reform will change their mind if their preferred policies don’t end up making the final cut.
Nonetheless, the overarching political dynamics on taxes will be different.
Republicans have so fervently opposed Obamacare for more than seven years that they had to do everything they could to repeal it once they got full control of Washington, congressional aides say. But taxes have been one of the GOP’s signature issues for far longer. It’s a topic that, more than health care, interests a broad cross-section of Republicans, including the president, his economic deputies and K Street.
The administration appears more fully engaged on the issue, with Trump’s top economic adviser Gary Cohn and Treasury Secretary Steven Mnuchin — both Goldman Sachs alums, making frequent trips to Capitol Hill.
“These are financial guys. They’re Wall Street guys,” one tax lobbyist said. “They care about taxes.”
Many close tax reform watchers also say that it looks like the White House and congressional leaders have devised a better tax reform rollout than they did on health care, even if Republicans have a ways to go yet on actually developing the policy.
The plan is still for those Big Six principals — Mnuchin, Cohn, House Speaker Paul Ryan (R-Wis.), House Ways and Means Chairman Kevin Brady (R-Texas), Senate Majority Leader Mitch McConnell (R-Ky.) and Senate Finance Chairman Orrin Hatch (R-Utah) — to finish their high-level work on tax reform by September, which would allow the two committees to fill in the details.
White House officials say Trump will hit the road before that work is done — though exactly where is still a work in progress. Spicer told reporters that he expected “there will be some activity in August and then into September” on tax reform.
Another White House staffer said Trump would focus on the problems with the current tax system and the need for changing it before his deputies and congressional leaders finish their plan. That idea has fans both among the Big Six and lobbyists, some of whom say that it would be difficult to get the tax policy figured out if the grassroots aren’t motivated.
“It’s critical because Americans want to know we’re serious about delivering on pro-growth tax reform this year. They want to know the key principles that we’re proposing, and they want to have input in it,” Brady said.
At the same time, tax aides on the Hill are planning their own effort to lay the groundwork for tax reform. Brady said it was crucial for lawmakers to be home next month to make the pitch.
“August is all about tax reform,” one Hill staffer said.
Groups aligned with the conservative billionaire Koch brothers are helping push the White House message as well, with spending on advertising from Freedom Partners and Americans for Prosperity.
As part of the multi-million dollar efforts on tax reform, AFP will conduct grassroots education, direct mail, other forms of ads and events in its 36 chapter states.
Other outside groups are working to exert influence on the public as well, though not necessarily in partnership with the White House.
The Heritage Foundation, for example, has circulated research papers and published op-eds on its own. Similarly, FreedomWorks has been making the case for tax reform through op-eds and other initiatives, sometimes with partners, as part of its own educational outreach.
For example, the group has paired with the Job Creators Network on a tax reform promotion through August that may continue into September.
“After eight years of anemic economic growth, the time is now,” said FreedomWorks’ vice president of legislative affairs, Jason Pye.
However, as if to demonstrate the gaps still to be sealed, Americans for Prosperity issued a statement Monday condemning talk of imposing a minimum tax on the foreign earnings of U.S. multinationals. And it remains to be seen whether Trump can stay on message during his sales pitches.
Tax analysts believe that the Big Six’s work could help smooth the tax reform process, and the principals themselves have suggested that they’re making progress in their regular meetings.
But they haven’t said that they’ve worked through some of tax reform’s knottiest questions — like whether tax cuts should be fully offset. It’s a crucial question since Republicans plan to move tax reform through a budget process that restricts deficit increases.
Ryan and Brady also have yet to throw in the towel on their own blueprint, which includes the controversial border adjustment that’s faced steep opposition from Senate Republicans, retail groups and others.
"Everyone thinks tax is the easy thing right now. Wait until we get into it. There will be pain associated with this,” said one senior GOP aide.
Both the Senate and the Trump administration have started to exert more influence on the tax reform process in recent weeks, given all the troubles that the House GOP blueprint has faced. But that also hasn’t sat well with some House GOP tax writers, who complain about all the criticism their efforts absorbed while the White House and Senate failed to produce detailed alternatives.
“I think in some ways we’re frustrated that things aren’t moving fast enough but realizing that we’ve been in this game longer than almost anyone else whether it be the White House, whether it be the Senate,” said Rep. David Schweikert (R-Ariz.).
Colin Wilhelm and Ben White contributed to this report.