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With the White House and top Republicans in Congress already on
the defensive over claims the plan would not cut taxes for many
middle-class Americans, Buffett and BlackRock Inc <BLK.N> Chief
Executive Larry Fink suggested in separate interviews that the
corporate rate may not have to be cut as deeply as proposed.
"We have a lot of businesses... I don't think any of them are
non-competitive in the world because of the corporate tax rate,"
Buffett, the chairman and CEO of Berkshire Hathaway Inc
<BRKa.N>, told CNBC.
Fink said a corporate rate as high as 27 percent could satisfy
U.S. businesses' need for tax relief, while avoiding an increase
in the federal deficit.
"What is being proposed is a pretty large expansion of our
deficits," Fink told Bloomberg TV.
The Republican tax plan unveiled last month calls for slashing
the corporate income tax rate to 20 percent from the current
level of 35 percent, which many multinationals already avoid
paying by taking advantage of abundant tax loopholes.
The plan contains up to $6 trillion in tax cuts, according to
independent analysts, which Trump and top Republicans say they
would offset by eliminating loopholes, deductions and tax breaks
and boosting annual economic growth.
Hungry for legislative victory after repeated failures in their
push to overturn Obamacare, many Republicans are now willing to
accept a tax plan that raises the federal deficit, a fact that
bothers some deficit hawks.
"I feel like in some ways, since Election Day, we've moved into
a party atmosphere. And that concerns me," said Republican
Senator Bob Corker, who has vowed not to vote for a tax bill
that increases the deficit.
Republicans also insist that cutting the corporate tax rate to
20 percent will help workers by increasing jobs and raising
salaries, though this claim is disputed by Democrats.
Senator Ron Wyden, the top Senate Democrat on tax policy,
accused the Trump administration on Tuesday of removing a
research paper from the U.S. Treasury's website that showed
workers would benefit only marginally from a corporate rate cut.
"Apparently that mainstream economic analysis had to be purged
because it basically didn't jibe with the Trump team's patter,"
Wyden said at a Senate Finance Committee hearing.
A Treasury spokeswoman said the document was a dated analysis
from the Obama administration that "does not represent our
current thinking and analysis."
An analyst who testified at the Senate hearing said only about
20 percent of the benefits of a corporate tax cut would directly
help workers.
Buffett and Fink also criticized other Republican tax
initiatives. Buffett said a proposal to repeal the estate tax
would be "a terrible mistake" that would benefit the wealthiest
Americans unnecessarily. Fink predicted tax legislation would
not pass if it includes a proposal to eliminate a popular
deduction for state and local tax payments.
"I don't believe we're going to get tax reform if there is the
elimination of deductibility of state and local taxes," he said.
Eliminating the state and local tax deduction would raise about
one-quarter of the $4 trillion in revenues that some Republicans
say they need to prevent tax cuts from creating a massive
increase in the federal budget deficit.
But eliminating that deduction is already opposed by Republican
lawmakers from high-tax states such as New York and California,
who say it helps their state governments pay for social
programs, including public education.
House of Representatives Ways and Means Committee Chairman Kevin
Brady discussed the state and local tax deduction at dinner on
Monday evening with about a dozen other House Republicans,
including some New York lawmakers. At least one came away
predicting there would be a compromise.
"We kicked around six or eight or 10 different types of
options," Republican Representative Chris Collins, a staunch
Trump ally from New York, told reporters.
(Reporting by David Morgan, additional reporting by Trevor
Hunnicutt in New York and Richard Cowan and Patricia Zengerle in
Washington; editing by Dan Grebler and Cynthia Osterman)
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