Gary Cohn, president and chief operating officer of Goldman Sachs Group Inc. (Photographer: David Paul Morris/Bloomberg)

Cohn Says Tax Writers Have to Get Corporate Rate Below 23%

(Bloomberg) -- White House economic adviser Gary Cohn suggested that the U.S. must cut its corporate tax rate by at least a third to compete with other developed countries.

Cohn’s comments during a Bloomberg TV interview Friday may signal President Donald Trump’s call for a 15 percent corporate rate -- which would represent a far larger cut -- is a starting point for negotiations as the administration and congressional tax writers begin drafting legislation.

Cohn highlighted the importance of getting the current 35 percent U.S. corporate rate more in line with the average rate among countries in the Organisation for Economic Co-operation and Development, which is about 23 percent. A White House tax outline released in April had set the 15 percent goal for corporations and pass-through businesses.

“We cannot be substantially higher than the OECD average tax rate out there,” Cohn said. “We’ve got to get in line with the rest of the world, we’ve got to entice capital to be invested in the United States.”

At the same time, he repeated that the administration will try to get the lowest rate possible.

The U.S. is the only industrialized country that taxes its companies on their global profits, no matter where they’re earned. But the federal tax code allows companies to defer paying taxes on overseas income until those earnings are brought home to the U.S. That deferral rule has prompted U.S. companies to shift profit to their overseas subsidiaries in low-tax countries -- often through debt transactions or intellectual-property licensing deals -- and leave it there.

Tax-cut advocates have said setting the U.S. corporate rate below the OECD average would help persuade U.S. companies to stop shifting profits offshore.

Cohn also repeated the Trump administration’s timetable of getting a comprehensive tax bill completed “early in the fall.” When asked what his top priority is, Cohn responded: “My No. 1 priority for now until the end of the year is taxes. My second priority is taxes. And if you’re confused, my third priority is taxes.”