Trump's plan to slash business taxes seen as 'guidepost' by congressional Republicans

Business tax rate cuts

In the plan, unveiled at the White House by Trump economic adviser Gary Cohn and Treasury Secretary Steve Mnuchin, Trump proposed cutting to 15 percent both the income tax rate paid by public corporations and that paid by "pass-through" businesses, including partnerships, S corporations and sole proprietorships.

The top corporate rate is now 35 percent, though few multinational companies pay it, thanks to loopholes that allow them to lower their effective tax rates. Despite this,corporations have pushed for a tax rate cut for many years, and Trump has obliged.

The top rate for pass-throughs, which account for most small businesses, is 39.6 percent, the same top rate paid by individuals. Unlike corporations, the profits of "pass-through" businesses flow directly onto their owners' tax returns.

In another concession to long-standing demands from corporate America, Trump called for bringing corporate profits being held offshore by multinationals into the country at a rate well below the current 35 percent rate now owed on "repatriated" earnings. He did not say what that rate would be, but said the administration was working with Congress on a low rate.

About $2.6 trillion in profits are being held tax-exempt abroad by US multinationals under a rule that says they are only taxable if brought into the United States.

If enacted, the repatriation tax holiday would produce a one-time surge in government revenue. If it were dedicated to infrastructure spending, it could attract votes from Democrats.

The plan also urged adoption of a "territorial" corporate tax system that would largely exempt foreign profits of US-based corporations from federal taxation.

Ryan expressed optimism about Trump's plan, even though it excluded a "border adjustment" tax on imports he has promoted.

That idea was part of initiatives floated by House Republicans as a way to offset revenue losses resulting from steep tax cuts.