President Trump said Monday that he would push for another significant tax cut if he is reelected, while bashing Democrats as tax-hikers.
“BIGGEST TAX CUT EVER, AND ANOTHER ONE COMING. VOTE!” Trump tweeted early Monday morning, while hospitalized for COVID-19.
The first tax cut he was referring to was the Tax Cuts and Jobs Act of 2017 that overhauled the corporate tax code and implemented temporary tax cuts for families. Trump announced last year that he’s also planning legislation for a middle-income tax cut if the Republican Party wins back the House of Representatives.
“Trump said he wants a big middle-class tax cut,” said Stephen Moore, one of Trump’s top outside economic advisers. Moore told the Washington Examiner that he met with Trump and his economic team 10 days ago in the White House, during which a tax cut for 2021 was discussed.
“He said he wants to lower the income tax percent to 15 from 22, create a tax-free savings account for the middle class, and revive the payroll tax cut idea. The goal is to get help for folks who make less than $100,000 a year,” said Moore, who is also a contributor to the Washington Examiner.
Moore said there’s a “high likelihood” Trump will announce a specific tax cut plan in the next couple of weeks before the election.
Trump unexpectedly called for a new middle-class tax cut before the midterm elections in 2018, which generally caught Republicans on Capitol Hill and elsewhere off guard. The tax cut never became a reality.
Some economists are skeptical that a tax cut would help the recovery from the pandemic.
“A tax cut would have limited benefits for those that need the most help,” said Kyle Pomerleau, a specialist in federal tax policy at the American Enterprise Institute, a conservative think tank.
“Things like stimulus checks and unemployment aid would have more benefit for those struggling right now. A tax cut could be positive in the long run, but it’s not best course of action right now,” Pomerleau said.
A tax cut could increase the income of households, help families pay their bills, and once the virus has subsided, incentivize people to return to work, Pomerleau said. Yet, the U.S. economy is not in that stage of its recovery yet, he said.
Some economists say Trump has been too vague and uncoordinated in his tax cut proposals.
“It’s missed opportunity, it seems like a bunch of random bullet point ideas that the president has tinkered around with for a while,” said Erica York, an economist with the Tax Foundation, a nonpartisan think tank that examines the tax code. “But none of this seems to combine into a really clear tax vision that would help with the economic recovery right now or create long-term growth.”
She said that lowering the 22% income tax bracket to 15% would not be targeted to aid middle- and lower-class people. Many families who earn more than a $100,000 a year would benefit the most from such a tax cut, York said, because most tax relief helps those at higher income bracket more than those at the lower levels due to the progressive tax structure.
Besides touting his own tax cut plans, Trump also took aim at Democrats on Monday, claiming that they would increase taxes and cause a major economic downturn if they won the November election.
“IF YOU WANT A MASSIVE TAX INCREASE, THE BIGGEST IN THE HISTORY OF OUR COUNTRY (AND ONE THAT WILL SHUT OUR ECONOMY AND JOBS DOWN), VOTE DEMOCRAT!!!” Trump added in another tweet on Monday.
Democratic presidential candidate Joe Biden pledged In May that he would only raise taxes on high-income earners and that there would be no tax hikes for people making less than $400,000.
Biden has also committed to reversing Trump’s tax cuts.
Author: Nihal Krishan
Source: Washington Examiner: Trump promises second major tax cut