President Donald Trump proposes to reward American multinational corporations with steep tax breaks on profits brought in while also offering to slash corporate income tax rate, reports quoting official sources said on Tuesday.
Multinationals bringing in overseas profits will be offered a tax rate of 10 per cent against the current rate of 35 per cent, the official said.
Trump is expected to slash the top rate on pass-through businesses to 15 per cent from 39.6 per cent, a move that would benefit many small business partnerships and sole proprietorships, reports said quoting an administration official.
For publicly-held corporations, Trump is expected to propose cutting the income tax rate to 15 per cent from 35 per cent.
Trump's tax plan, however, is a move away from the comprehensive tax reform that Republicans have been demanding. It will also not include a controversial ''border-adjustment'' tax on imports that was in earlier proposals floated by Republicans in the US House of Representatives as a way to offset revenue losses resulting from tax cuts.
Analysts do not expect the plan to include any proposals for raising new revenue to offset that lost by the tax cuts, and so, if enacted, it would potentially add billions of dollars to the federal deficit.
Trump sent Treasury Secretary Steve Mnuchin and National Economic Council Director Gary Cohn to Capitol Hill on Tuesday to brief lawmakers on the plan to be unveiled on Wednesday afternoon.
Mnuchin and Cohn, both veterans of investment bank Goldman Sachs, went to Senate Republican Leader Mitch McConnell's office on Tuesday evening, where they all met with House Speaker Paul Ryan, and the chairmen of the House and Senate tax committees, Orrin Hatch and Kevin Brady, respectively.
Hatch called it a ''preliminary'' 30-minute meeting and participants described it as positive and productive.
As Mnuchin left the Capitol he told reporters there is ''no question'' the Trump administration and Republicans in the Senate and House agree on the ''fundamental principles of tax reform.''
The House Republican plan, championed by Ryan and Brady, proposed a 20-per cent corporate tax rate. Many US corporations, especially large multinationals, already pay well below the statutory 35 per cent tax rate but have been campaigning for a formal rate cut for many years.
The Ryan-Brady plan did include ''pay-fors,'' including a proposed ''border adjustment'' tax that would favour exports and discourage imports.
Cutting the top tax rate for pass-through businesses, which account for most US companies, could benefit Trump himself, said Frank Clemente, executive director of Americans for Tax Fairness, a Democratic activist group.
''In trying to slash taxes for pass-through business entities, Trump is seeking to dramatically reduce his own tax bill,'' he said in a statement.