This headline from Politico scared us:

Members of the House Freedom Caucus have an idea for lawmakers from California, New Jersey and New York seeking to expand a key tax deduction in negotiations over a sweeping GOP policy bill: We’ll trade you lower taxes on your constituents for higher taxes on your companies.

Turns out Politico got the story half right and half wrong. It is true that some conservative Republicans are saying that IF we must raise the State and Local (SALT) deduction, then this should be paid for by eliminating or capping the corporate SALT deduction. This has long been OUR parity proposal. If small businesses can’t deduct their taxes, why should corporations?

However, some House Republicans want to raise the corporate tax rate from 21% to 25% in order to reduce the deficit and pay for SALT relief.

That is a rotten idea. It would raise the U.S. corporate rate to well above the international average and toss our economy in a competitive hole. It turns 40 years of supply side Reaganomics on its head. This scheme would trade more tax loopholes for higher tax rates. We always and everywhere want fewer loopholes and LOWER rates.

Our friend David Asman of Fox News points out that raising the rates will end up losing money: