On August 24, President Donald Trump promised a “major” middle-class tax cut if he is re-elected and Republicans retake the House in the 2020 elections.
“If Republicans take back the House, and keep the Senate and presidency, one of our first acts will be to approve a major middle income tax cut,” Trump tweeted over last weekend. “Democrats only want to raise your taxes!”
Democrats have proposed rolling back parts of the 2017 GOP tax law and focusing taxes more narrowly on the middle-class. Trump and other White House officials have been mulling steps that might shore up consumer and business confidence ahead of the 2020 elections. Last week, Trump said he was considering a payroll tax cut, which was last used in 2011 and 2012 by the Obama administration to stimulate consumer spending during the last recession, as well as a 1 or 2 percent cut to the corporate tax rate and a move to index the capital gains rate to inflation.
This week, White House advisor Larry Kudlow said the administration is no longer considering a temporary payroll tax cut but said some sort of “tax cuts 2.0” package is desirable.
“The idea of some short-term payroll tax cut fix – it doesn’t work,” Kudlow said. “It never works. It has no lasting impact.”
Lowering individual rates, lowering capital gains rates and providing tax relief for residents of high-tax states could be rolled out before the 2020 elections, Kudlow said.
Trump similarly promised a middle-class tax cut leading up to the 2018 midterm elections, but the idea lost steam after Republicans lost the House last November. House Ways and Means Committee Chairman Richard Neal (D-MA) said the administration’s proposal to index capital gains taxes to inflation proves that Trump is only interested in tax cuts that benefit higher earners.
“After spending more than $2 trillion on tax cuts for the wealthiest Americans and big corporations, Trump and congressional Republicans now want to give even more benefits to people at the very top,” Neal said. “If the Trump administration unilaterally changes the capital gains tax structure, it wouldn’t just be bad policy, it would be executive overreach. Tax legislation must originate in the House Ways and Means Committee – the president should not circumvent Congress to alter the tax code.”
This article was provided to OSAE by the Power of A and ASAE's Inroads.