President Trump said Thursday that he is working on a new tax cut for middle-class households, to be unveiled “sometime in the next year.”
Speaking to lawmakers at a GOP retreat in Baltimore, Trump said, “we’re working on a tax cut for the middle-income people that is going to be very, very inspirational. … It'll be a very, very substantial tax cut for middle-income folks who work so hard.”
The president, who has hinted at tax cuts several times over the last year without producing any specific proposals, provided no further details. Although House Speaker Nancy Pelosi and other Democratic lawmakers have said they are open to the idea of a middle-class tax cut, their insistence that new cuts be paid for with tax increases on the wealthy make it unlikely that the president will be able to make a deal on the issue with a divided Congress.
White House economic adviser Larry Kudlow told reporters Friday that the tax-cut plan would be made public “sometime in the middle of next year,” putting the release date close to the 2020 election.
Republican lawmakers may be more focused on making permanent their 2017 tax cuts, some of which are set to expire after 2025. “The first and most important step is we can make the cuts for families and small business permanent,” Rep. Kevin Brady, the ranking Republican on the tax-writing House Ways and Means Committee, said Friday.
But No Capital Gains Tax Cut – for Now
On Wednesday, Trump reportedly decided against using his executive authority to index capital gains to inflation, a controversial move that would reduce tax revenues by about $102 billion over 10 years, according to the Penn Wharton Budget Model, with wealthy investors receiving most of the benefit.
“President Trump was thoroughly briefed on the complex economic, legal and regulatory issues, and concluded that at this time he does not feel enough of the benefits will go to the middle class,” a White House spokesman told The Wall Street Journal.
Administration officials said the idea has been under discussion at the White House for months. While some aides, including Kudlow, have pushed the plan enthusiastically, others have expressed concerns about the potential political costs of cutting taxes for the rich ahead of the 2020 election. Trump appears to have sided with the latter group, although he may return to the proposal at a later date, according to the Journal.
Trump has also decided not to pursue the payroll tax cut he mentioned to reporters in August. Treasury Secretary Steven Mnuchin told CNBC Thursday that the White House is now focused on the second round of tax cuts to be released next year.
