President Trump is putting together a proposal for a second round of tax cuts to fortify his reelection platform, but the effort is coming together only hesitatingly and faces uncertain buy-in even among Republicans.
“It will be a very substantial tax cut for middle income folks who work so hard,” Trump said Thursday of his plans to create a middle-class tax cut, speaking during a retreat for House Republicans in Baltimore. He added that the tax cut would be “very, very inspirational” but did not mention any further details.
A senior administration official told the Washington Examiner that the White House was looking at “Tax Cuts 2.0,” with Tax Cuts 1.0 being the Tax Cuts and Jobs Act of 2017 that overhauled the corporate tax code and implemented temporary tax cuts for families. The official said new tax cuts “would be a key part” of what the administration would like to see from Congress in the coming months.
Trump faces hurdles getting congressional Republicans on board with with his next round of tax cuts though, not to mention Democrats who are bound to mount an aggressive opposition.
Texas’ Kevin Brady, the top Republican on the House Ways and Means Committee and a key author of the 2017 tax overhaul, said on Wednesday that his focus wasn’t on Tax Cuts 2.0, but instead on finishing the work left over from the previous effort.
“My first priority is making the tax cuts for families and small businesses permanent from the Tax Cuts and Jobs Act,” Brady said.
Brady also said that he aimed to send the president bipartisan legislation to overhaul the tax treatment of retirement savings, but he added that he would be open to looking at a middle class tax cut.
Trump talked a big game regarding new tax cuts shortly before the 2018 midterm elections but dropped the subject afterward. Now, he and White House officials, such as economic adviser Larry Kudlow and Treasury Secretary Steven Mnuchin, have resumed talking about middle-class tax cuts in recent weeks amid growing concerns about a possible recession.
Trump appears to fluctuate back and forth on tax cuts depending on the state of the economy and his own popularity. He told reporters just a month ago that, “I’m not looking at a tax cut now.”
A senior administration official told FOX Business on Friday that the Tax Cuts 2.0 could simply be taking the personal side of the 2017 tax cuts and making them permanent, including the lowered personal tax rates, the doubled standard deduction, and the $10,000 cap on state and local tax deductions.
Some outside groups are seeking more. Americans for Tax Reform, a nonprofit taxpayer advocacy group, said that they expected Tax Cuts 2.0 not only to make the 2017 tax cuts permanent but also to expand tax-advantaged savings accounts and allow businesses to recover more startup costs, both of which are measures Brady has sought to advance in the Ways and Means Committee.
No Democrats supported Trump’s 2017 tax cut, complicating the legislative path for any Tax Cuts 2.0 legislation. Instead, Democrats have focused on expanding tax credits targeted at lower-income families and have sought to reverse parts of the Trump tax cuts. Some Democratic presidential candidates have called for repealing most of the tax law.