Corporate Rate Cut: A Gradual Phase-in Would Be Best

Alex Brill and Alan D. Viard | AEIdeas

Both the House’s tax bill and the Senate Finance Committee’s bill slash the corporate income tax rate from 35 to 20%, a much needed reform that will pull capital into the United States and grow the economy. Thankfully, both bills cut the corporate rate on a permanent basis.

However, neither bill gets the timing quite right. The House bill has an immediate rate cut starting in 2018 and the Senate Finance bill has the lower rate abruptly take full effect in 2019. The best approach would be to gradually phase in the rate cut.

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