As they start and stop and lurch toward action on their overriding priority of tax-cut legislation, congressional Republicans face one particularly large problem. By almost every account, the centerpiece of the bill, both substantively and politically, is a cut in the corporate income tax rate from 35 percent to 20 percent. It accounts for roughly $2 trillion (over ten years) in the bill’s costs. It is supported by a vast array of business interests. And most of all, it is the apple of Donald Trump’s eye. Having already backed down from an initial demand of a 15 percent corporate tax rate, Trump is absolutely dug in at 20 percent. Most recently, he rained on talk of phasing in the rate cut to mitigate its cost.
While few if any congressional Republicans disagree with Trump on the corporate tax cut, there is a problem: It’s the least popular element of the bill.
At this early point, the whole bill has some image problems, with the corporate tax cuts being a particularly hard sell. A new NBC/Wall Street Journal survey shows that only 25 percent of respondents think “Trump’s tax plan” is a “good idea,” with 35 percent adjudging it as a “bad idea,” and the rest undecided. A Morning Consult poll offers better overall numbers for the tax bill (48 percent supporting, 37 percent opposing), but shows only 39 percent favoring a corporate tax rate cut (with 41 percent opposing). And a CBS News poll indicates that a firm majority of voters favor a tax increase for “large corporations.”
Republicans have tried to promote the idea that corporate tax cuts are really designed to boost workers’ wages, but that barely passes the laugh test. A more promising tack is simply to de-emphasize this element of the bill and talk as though it’s less important to sponsors than more popular provisions like an increase in the standard deduction or a boost in the child tax credit. But it’s worth noting that just about all the big corporate priorities in this legislation are treated with suspicion, if not hostility, by the general public, even in the relatively upbeat Morning Consult assessment. Only 29 percent support a move to a territorial system for taxation of overseas profits, and a lukewarm 38 percent favor the ability to immediately write off business investment costs.
Unfortunately for congressional Republicans, this tax bill has now assumed outsize importance thanks to their repeated failure to enact health-care legislation or move on other key priorities like immigration, infrastructure, or the vague cultural preoccupations of their base. And they are having massive internal problems with aspects of the tax plan that have not attracted widespread public attention, like the deduction for state and local taxes. In the end, though, it is the gap between what they most want in a tax bill and what the public actually supports that could be the undoing of this legislation.