Jamie Dimon, the chief executive of JPMorgan Chase and the chairman of the Business Roundtable, called the plan “an encouraging step forward in our shared goal of a tax system that delivers higher economic growth, job creation and wages that our country desperately needs.”
John Stephens, the AT&T chief financial officer, said it was “a big step toward meaningful reform that would encourage more investment and job creation in the United States.”
And U.S. Chamber of Commerce’s chief executive, Thomas J. Donohue, said the proposed tax cuts were “good news for American families and employers.”
Yet even as business leaders salivate at the prospect of lower taxes, skeptics are questioning whether companies would actually invest tax savings in things like factories and jobs, and whether such cuts would meaningfully help the economy, which is already expanding.
“This is a very cynical document,” said Edward D. Kleinbard, a tax expert at the University of Southern California law school. “The extraordinary thing about the proposal is that we know that it loses trillions of dollars in revenue, yet at the same time the only people we can identify as guaranteed winners are the most affluent.”
While the tax plan includes numerous changes to the ways individuals are taxed, some of the most far-reaching reforms would be for the companies that have long complained of an overly burdensome tax code.
One of the most sweeping proposals would be to lower to 25 percent the tax rate for so-called pass-through businesses, which are currently taxed at the individual rates of their owners. Such a change would dramatically lower the taxes paid by the majority of American businesses. Some 95 percent of companies in the United States are structured as pass-through entities, generating the bulk of the government’s tax revenues.
“A lower rate for pass-through entities is essential to ensuring small businesses are not left behind,” said Jay Timmons, the chief executive of the National Association of Manufacturers.
Another major development, especially for big companies that have long complained about their tax rate, would be the proposed lowering of the corporate tax rate to 20 percent, well below the current rate of 35 percent.
“A significantly lower corporate tax rate will help U.S. companies compete with companies from other industrialized countries and spur long-term economic growth,” said Mr. Stephens. “For AT&T, we would step up our investments in the technology and next-generation networks that are engines of our modern economy.’’
The White House said that a corporate tax rate of 20 percent would increase American competitiveness, bringing the rate below 22.5 percent, which is what it claimed was the average corporate tax rate in the industrialized world.
But tax experts questioned the White House’s accounting. “To use the 22.5 percent is simply intellectually dishonest,” said Mr. Kleinbard of U.S.C. “We’re including countries like Macau and Moldova in that number.”
When countries’ tax rates are weighted by gross domestic product, the actual average is closer to 29.4 percent, according to the Tax Foundation.
Regardless of the benchmark, the White House is pushing a dramatic cut to the corporate tax rate. “It’s going to increase corporate profits dramatically,” said Mr. Willens, the tax expert who has advised companies for 40 years. “It’s unbelievable to contemplate after all these years of doing this.”
Perhaps the most dramatic suggestion in the tax plan is for a territorial tax system, which could allow multinational corporations to mostly avoid paying the United States government taxes on their overseas profits.
Right now companies must pay steep taxes if they want to repatriate earnings made abroad, leading big corporations like Apple to keep billions of dollars overseas. And while details of the proposal were scarce, and may yet include some tax on foreign profits and a one-time repatriation tax on existing overseas profits, the broad outlines of the plan were good news for big business.
“Moving to a territorial system is unbelievable,” said Mr. Willens. “It’s incredible to think that they are going to be able to repatriate foreign earnings without any tax at all.”
Opponents point to studies showing that repatriation does not necessarily lead to greater investment or job creation by businesses.
The Trump administration made no mention on Wednesday of how it planned to pay for such steep tax cuts, which could cost $2.2 trillion, according to the Committee for Responsible Federal Budget, a nonprofit group. And from the moment it was announced, critics of the plan called it a giveaway to the rich.
Business leaders, too, seemed to appreciate the fact that enacting a giant tax overhaul was no sure thing, especially after several failed attempts to overhaul the health care law.
“It’s crunchtime for Congress,” said Mark A. Weinberger, chief executive of the financial services firm EY and chairman of the Business Roundtable’s Tax and Fiscal Policy Committee. Claiming that the president’s tax plan would “create jobs and growth” with lower tax rates, Mr. Weinberger said, “Congress needs to preserve these elements and fill in the details quickly so the proposals can become law by year’s end.”
And even if the broad outlines of the proposed tax overhaul do get passed, amounting to a windfall for businesses large and small, there is one way the plan could adversely impact the economy.
“This isn’t good for tax professionals,” Mr. Weinberger said. “There are people who have spent their whole careers trying to figure out how to repatriate overseas profits and lower corporate taxes. If this goes through, there won’t be much for them to do.”