Updated 3:07 p.m. | Senate Republicans may have found a way to meet President Donald Trump’s goal of reducing the corporate tax rate to 15 percent. The chamber is said to be eyeing a proposal from Senate Finance Chairman Orrin G. Hatch that would allow companies to deduct shareholder dividends from their profits.
Multiple aides and lawmakers, including Hatch himself, said the so-called corporate integration proposal is an option under consideration for the Senate’s version of the bill.
Such a measure would theoretically allow companies to shift enough profits to shareholders to hit the 15 percent target Trump has called for. That could be unrealistic, aides said, as most businesses are unlikely to shift all their profits to shareholder dividends.
The so-called Big Six, the group of congressional leaders and Trump administration officials writing the tax legislation, released a broad framework of principles Wednesday for the effort that all participants have agreed to. It made a small mention of Hatch’s proposal.
Watch: Ryan Touts Tax Proposal
Lawmakers such as Pennsylvania GOP Sen. Patrick J. Toomey said the House and Senate are expected to advance their distinct bills, with the goal of going to conference to hash out discrepancies.
“As quickly as possible,” he said Wednesday when asked how soon that conference could occur.
Hatch’s corporate integration proposal is not expected, at this point, to be included in the House version, one aide with knowledge of the deliberations said. But it is under consideration for the Senate version.
“There’s a real chance,” Hatch said when asked about it Tuesday. “I’m hopeful they’ll take what I consider to be the right corporate integration approach.”
The Utah Republican declined to comment on specific details.
At a Senate Finance hearing earlier this month, Hatch alluded to the corporate integration proposal being considered for the broader tax overhaul effort.
“I continue to believe this idea — whether it applies fully or in some other limited way — can help address a number of the problems we’re trying to solve with comprehensive tax reform. I look forward to continuing this conversation as the process moves forward,” he said.
Republicans included a goal of reducing the corporate tax rate to 20 percent in the framework released Wednesday.
Asked whether his idea to prevent double taxation of corporate income could help meet Trump’s targeted rate of 15 percent, Hatch said, “That’s a little bit, pretty hard, to do.”
Getting an extension
While Republicans initially hoped to complete work on the tax legislation by the end of the year, several aides said that timeline is now unrealistic and instead expect it to continue into 2018.
The Senate is expected to begin the process next week with a markup of the fiscal 2018 budget resolution. That is the first step in the fast-track process known as reconciliation that Republicans are using to try to advance a tax bill with only GOP support.
While there has been some disagreement over what that budget resolution should include, there appears to be a growing consensus it will operate mainly as a shell to allow Republicans to move on to the tax overhaul.
“Something like mandatory spending cuts in the budget resolution are not binding. They don’t actually have to happen and historically, they have not happened,” Toomey said. “What the budget resolution does do is it makes it possible to do tax reform with a simple majority vote in the Senate.”
Unlike the GOP’s failed attempt to repeal the 2010 health care law, the tax measure is expected to go through the regular committee process, with hearings and an eventual markup in the Senate Finance Committee.
Correction 1:06 p.m. | An earlier version of this story did not mention that the Republican tax framework alluded to Sen. Orrin G. Hatch’s corporate integration proposal.