Trump Exploring Cutting Rate On “Middle Class” To 15% – “Tax Cut 2.0” Is Back

Nov 12, 2019 | News

It’s November again, only to the Trump administration it is 2018 once more instead of 2019: after all, it was one year ago, just before the midterm elections, that the White House floated “tax cut 2.0” to boost popular support for Republicans with no success.

Fast forward to today when on Tuesday first Larry Kudlow hinted, then the WaPo reported that Trump’s economic advisers are exploring whether the president should campaign for reelection proposing a 15% tax rate for the American middle class, with some seeing the idea as a simple way of selling Republicans’ economic agenda as not merely beneficial to the rich, according to multiple people involved in the White House’s internal deliberations over “tax cut 2.0.”

As a reminder, weeks before the 2018 midterms, Trump suddenly floated a 10% tax cut for the middle class, saying he was working on a “very major tax cut for middle-income people.” Talk of that plan fizzled after the election and a concrete proposal never materialized.

So with the presidential election now less than a year away, it’s time to re-float this idea once more.

According to the WsPo report, Trump’s top economic advisor and the head of the National Economic Council, Larry Kudlow, is spearheading the effort behind Trump’s second tax cut package and is widely seen as a leading proponent of the new 15% rate. While it is unclear if Trump has approved the idea, the president has pushed aides to develop a simple tax message for 2020 focused on middle class tax relief.

Unfortunately for Trump, just like in 2018, the popular response has been noticeably muted as the US middle-class no longer believes the president: the White House has faced sharp criticism for its 2017 tax cut law, because its tax cuts ended up helping the wealthiest almost exclusively. The new plan is unlikely to pass Congress before the 2020 election but would give the White House a specific plan to present to voters during next year’s presidential campaign.

Meanwhile, the US would somehow need to issue even more debt to fund what is now an out of control budget deficit, to wit:

Reducing the tax rate to 15 percent for middle-class taxpayers could lower taxes by trillions of dollars over 10 years, according to budget experts, although precise estimates are impossible given that details remain vague. Doing so would free up much more money for Americans to spend, but it would also dramatically add to the deficit unless the cuts were offset by major spending reductions throughout the federal government. The GOP tax law of 2017 already added more than $1.5 trillion to the national debt.

Kudlow declined to comment on what the administration was considering, but stressed in an interview that the process is still in its preliminary stages and that no final decisions have been made.

“[Trump] wants to afford as much relief and simplicity as possible for middle-income taxpayers,” he said.

In addition to a middle-class tax cut, the White House has been discussing other ideas including a payroll tax cut, revamping how capital gains are taxed, exempting savings from taxes, and reducing the number of tax brackets from seven to somewhere around three or four, according to Stephen Moore, a Heritage Foundation tax expert who has worked with the White House on tax policy.

The irony continues: with some of the more rabidly progressive presidential candidates having virtually promised free “everything” to get elected, Democrats have dismissed talk of a second round of tax cuts as a way for Trump to deflect from controversial parts of the 2017 legislation, which permanently cut taxes for corporations but only temporarily cut taxes for individuals. Speaking in New York on Tuesday, Trump defended the 2017 tax cut, saying it had provided “massive relief” for middle class families.

“We think we can bring it down still more,” Trump said of U.S. tax rates.

Perhaps he is right, but the question is will that do anything for most Americans?

“Depending on where it starts, a 15 percent rate would be a relatively small tax cut for middle income people,” said Michael Linden, a tax expert at the Roosevelt Institute, a left-leaning think-tank. “This is an acknowledgement that Republicans’ original tax plan was heavily skewed to the wealthy, the middle got almost nothing, and people at the bottom got literally nothing. I’m not sure having a second go at it is going to solve anything.”

More vividly, Linden laid out an example according to which a single filer making $50,000 would receive a tax cut of $0. A married couple making $100,000 would receive a tax cut of $0.

Practical implications of “tax cut 2.0” notwithstanding, expect to hear much more about upcoming “middle class cut” in the coming weeks, especially if the trade deal with China “mysteriously” fails to materialize…

Article originally appeared on


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