White House Disputes Talks of Payroll Tax Cut
Despite recession murmurs, the administration keeps arguing the economy is strong
This week, White House officials disputed reports that the administration is considering a temporary payroll tax cut as a means of countering a possible economic slowdown. President Donald Trump and other senior officials continue to praise the strength of the economy but are having internal discussions about steps that could be taken to prevent any faltering in consumer and business confidence ahead of the 2020 elections.
Measures that have been discussed include 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.
After initially saying he would “love to do something” to cut taxes further, Trump reversed course on Wednesday, telling reporters he is not considering a payroll tax cut because “we don’t need it” and “the United States is doing phenomenally well.”
The payroll tax was cut in 2011 to 4.2 percent but was allowed to reset back to 6.2 percent in 2013. The payroll tax cut during the Obama administration lowered taxes by more than $100 billion each year but added to the deficit. The Trump administration is already under fire from fiscal hawks who say the escalating deficit and spending increases are severely endangering the nation’s long-term fiscal health.
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