“Goldman Sachs economists say it’s more likely Congress approves tax cuts by next year, after a Senate deal on the budget resolution,” Patti Domm reports for CNBC. “”
“The economists say that the tentative agreement, announced by Republican Senators Bob Corker of Tennessee and Pat Toomey of Pennsylvania, would call for instructions for a tax cut of up to $1.5 trillion be included in the budget resolution,” Domm reports. “‘Our understanding is that this figure represents their view of what a ‘revenue neutral’ agreement would cost when scored conventionally,’ Goldman economist Alec Phillips wrote. Phillips said assuming expiring tax cuts would be extended, it would work out to $1 trillion in new tax cuts over 10 years, or 0.4 percent of GDP over that period.”
“The Goldman economists assume the tax cuts would be phased in and could boost growth by 0.1 or 0.2 percentage points of GDP in 2018-2019,” Domm reports. “The White House and Republican Congressional leaders are expected to release an outline of tax reform that includes a corporate rate in the low 20s, business investment incentives, profit repatriation, a move to a new territorial tax system, and middle-income tax cuts.”
Read more in the full article here.
MacDailyNews Take: As we wrote back in April: “We’ll see where it all ends up (the corporate tax rate won’t end up being 15%, but it may end up being 20-25%, which is certainly better than the stifling 35% it is now). As we’ve been saying for many years now, the U.S. corporate tax rate is way too high. Obviously.”
Under the current U.S. corporate tax system, it would be very expensive to repatriate that cash. Unfortunately, the tax code has not kept up with the digital age. The tax system handicaps American corporations in relation to our foreign competitors who don’t have such constraints on the free flow of capital… Apple has always believed in the simple, not the complex. You can see it in our products and the way we conduct ourselves. It is in this spirit that we recommend a dramatic simplification of the corporate tax code. This reform should be revenue neutral, eliminate all corporate tax expenditures, lower corporate income tax rates and implement a reasonable tax on foreign earnings that allows the free flow of capital back to the U.S. We make this recommendation with our eyes wide open, realizing this would likely increase Apple’s U.S. taxes. But we strongly believe such comprehensive reform would be fair to all taxpayers, would keep America globally competitive and would promote U.S. economic growth. – Apple CEO Tim Cook, May 21, 2013
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