By Paul Bonner

At an estimated projected revenue cost over 10 years of $1.46 trillion, the reduction of the corporate income tax rate in the Tax Cuts and Jobs Act, H.R. 1, is the bill's largest single item by forecast negative effect to the federal budget, according to the Joint Committee on Taxation's estimate (JCX-47-17). But the bill contains many other provisions that would affect a large number of businesses, if enacted.

The corporate tax rate cut is offset by hundreds of billions of dollars in revenue savings from provisions of the bill affecting businesses, the largest of which is a new limitation on deductions for interest paid, which would raise $172 billion in additional revenue.

The rate reduction's revenue cost is highlighted by the current rate structure's relatively low threshold for a relatively high 34% rate. Taxable corporate income over $75,000 is subject to it, with a 35% rate that phases in at incomes between $15 million and $18,333,333. The Tax Cuts and Jobs Act's flat 20% rate on C corporations thus should represent a significant rate cut for most corporations. The only corporations with a lower rate currently are those with taxable income under $50,000, which is subject to a 15% rate.

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