Advisors to President Donald Trump are reportedly mulling a “tax cut 2.0” that would lower the income tax rate for middle-class Americans to 15 percent.
The Washington Post reported Tuesday that the plans are still very much in flux, but that Trump has told his economic advisors he wants a simple tax plan to present to voters next year to differentiate the Republicans from their Democratic challengers.
Highlight: President Trump talks about the impact of the tax cuts on families, communities and businesses: pic.twitter.com/yeGnBP8t3H— Yahoo Finance (@YahooFinance) November 12, 2019
Several alternatives also are being floated, but the director of the White House Economic Council, Larry Kudlow, is said to favor lowering rate for middle income earners in order to offset criticism that Trump’s first tax plan benefitted mostly wealthier Americans.
The odds of any new plans passing Congress before the election are slim, White House aides admitted to the Post, but a proposal on the table would give Trump something concrete on which to campaign.
Current tax rates range from 10 percent on income below $10,000 to 39 percent for income of more than $418,000. Income between $38,000 and $191,000 is now taxed at 25 percent on the lower range and 28 percent on income of more than $91,000.
Cutting income tax rates nearly in half for middle income Americans would shave trillions off their tax bills but add substantially to the federal budget deficit unless accompanied by significant cuts in government spending. The GOP tax cut of 2017 added nearly $1.5 trillion to the national debt by some estimates.
I love tax relief, but this is getting ridiculous. Deficits are already headed towards $2 trillion within a decade. Unless Republicans are actually willing to cut spending accordingly, no additional tax cuts will prove sustainable. Pick a level of spending, and then pay for it. https://t.co/Wft5rAsF6T— Brian Riedl (@Brian_Riedl) November 12, 2019
Other ideas being floated include reducing the number of tax brackets from seven to three or four, a cut in payroll taxes, changes to how capital gains are taxed, and exempting savings from taxes.
At an economic speech in New York Tuesday, Trump said his 2017 plan brought “massive tax relief” for middle-class families, but added, “We think we can bring [tax rates] down still more.”