K-STREET, 10,000 FEET: Conservative coalition warns against “stealth tax” that could jeopardize Trump’s corporate tax cuts

THE LOWDOWN:

• A coalition of conservative groups is warning Republicans in Congress to not eliminate or reduce the corporate deduction for state and local taxes (C-SALT) without a proportional cut in the corporate tax rate.

• The Center for Individual Freedom (CFIF) wrote to Sens. John Thune (R., S.D.) and Mike Crapo (R., Idaho), along with Speaker Mike Johnson (R., La.) and Rep. Jason Smith (R., Mo.), in a letter obtained exclusively by the Washington Reporter.

• CFIF was joined by a series of conservative heavyweights in its latest missive, including Americans for Tax Reform, Consumer Action for a Strong Economy, the Innovation Economy Alliance, the Shareholder Advocacy Forum, and more.

• It comes as some Hill Republicans are deliberating a reduction or outright elimination of the C-SALT deduction as an offset in reconciliation.

A coalition of conservative groups is warning Republicans in Congress to not eliminate or reduce the corporate deduction for state and local taxes (C-SALT) without a proportional cut in the corporate tax rate.

The Center for Individual Freedom (CFIF) wrote to Sens. John Thune (R., S.D.) and Mike Crapo (R., Idaho), along with Speaker Mike Johnson (R., La.) and Rep. Jason Smith (R., Mo.), in a letter obtained exclusively by the Washington Reporter.

The coalitions caution that “eliminating or limiting the C-SALT deduction without proportionally lowering the corporate tax rate, however, would constitute a destructive and costly step backwards.”

“It would result in a stealth tax increase that would raise effective U.S. corporate tax rates for many businesses from President Trump’s 15% target upward toward the excessive job-killing rates of past administrations,” they warned.

CFIF was joined by a series of conservative heavyweights in its latest missive, including Americans for Tax Reform, Consumer Action for a Strong Economy, the Innovation Economy Alliance, the Shareholder Advocacy Forum, and more.

It comes as some Hill Republicans are deliberating a reduction or outright elimination of the C-SALT deduction as an offset in reconciliation.

However, taxpayer advocates warn that this, without a proportional cut to the corporate rate, could lead to a marginal tax increase on businesses and go against President Donald Trump’s plan to lower corporate taxes to 15 percent.

Grover Norquist, America’s leading taxpayer advocate, is a signatory to CFIF’s letter, and has warned in separate letters to Congress about this issue.

“Any limitation on the C-SALT deduction should be rejected by lawmakers unless it is used to cut the corporate income tax rate,” Norquist wrote. “In contrast with President Trump’s call to cut the corporate rate to boost domestic manufacturing, ‘capping C-SALT is a backdoor increase in effective corporate income tax rates,’ according to the Tax Foundation, with the heaviest tax burden falling on the American manufacturing industry.”