JERUSALEM — The 2017 Republican tax cuts have been a dud on the campaign trail ahead of the November midterm elections, so President Trump has come up with a new plan: more tax cuts.
In Nevada on Saturday, Mr. Trump said he and Republican lawmakers had been working on “a very major tax cut” for middle-income people that would be rolled out in the coming weeks.
There is no chance of such a plan passing even the House before the midterms, let alone the Senate, because Congress is in recess through the election. So the move appears to be an effort to give Republican voters a jolt of enthusiasm as the polls are opening — and perhaps an acknowledgment of how small a boost Mr. Trump’s signature tax bill seems to be giving Republicans in the battle to control Congress.
Steven Mnuchin, the Treasury secretary, said in an interview on Sunday that he had been working diligently with Representative Kevin Brady of Texas, the Republican chairman of the House Ways and Means Committee, to develop another tax plan that would be released “shortly.”
“This is specifically focused on the middle class and not beyond that,” Mr. Mnuchin said in Jerusalem on the first stop of his six-country Middle East trip.
Mr. Mnuchin said the president asked Treasury officials and Republican lawmakers to focus on developing a middle-class tax plan. But he could not offer details about which tax brackets might have lower rates or say if the package would include more generous deductions. Nor has anyone explained how — or whether — the plan would be financed or if it would again add to the nation’s ballooning deficit.
Last year’s $1.5 trillion tax cut is expected to add $1 trillion to the nation’s deficit, though Republican lawmakers continue to insist the tax bill will pay for itself with stronger economic growth.
The Treasury Department released figures last week showing that the federal budget deficit widened by 17 percent in the 2018 fiscal year, to $779 billion, despite a robust economy. Federal revenue fell considerably as a result of the tax cut, which slashed corporate and individual income tax rates.
Mr. Mnuchin said the effect that the size and timing of the additional cuts would have on the nation’s finances was being taken into consideration. That could mean that the administration would seek to offset the tax cuts with spending cuts, or by raising taxes on other groups of taxpayers.
However, Mr. Mnuchin reiterated his view that the tax cuts passed last year were not adding to the debt, explaining that they would pay for themselves as long as the current level of economic growth is sustained. There is no evidence thus far that the cuts are paying for themselves, even though growth has accelerated this year.
Mr. Mnuchin said the real driver of the debt was government spending, echoing Mr. Trump’s complaint that Democrats insisted on an increase in funding of domestic programs in exchange for approving more money for the military.
House Republicans have moved to extend last year’s individual tax cuts, which are set to expire in 2025, while the corporate tax cuts are permanent. The bill passed the House last month with little fanfare or effect on polling in key House races, and the legislation was dead on arrival in the Senate, where Republicans hold a razor-thin majority.
“This would be different than what the House had already passed,” Mr. Mnuchin said. “It’s in addition, it’s not instead of.”
The tax cuts Mr. Trump signed into law late last year include a sharp reduction in the corporate rate, to 21 percent from a high of 35 percent, along with cuts for other business owners and for individuals. Independent analyses show they are disproportionately helping high earners — particularly high-earning white Americans.
The Joint Committee on Taxation, Congress’ independent scorekeeper for tax cuts, predicts that Americans earning $100,000 a year or more will reap 75 percent of the savings from the cuts next year. If Congress allows the individual income tax cuts to expire as planned, the committee predicts that middle-class and low-income Americans will face tax increases in 2025, while high earners as a group continue to enjoy a tax cut.
Democrats have hammered the cuts as a giveaway to the wealthy, which is one reason the tax overhaul has not given Republicans the electoral benefits they expected.
After racing the cuts through Congress in two months last year, and passing them without a single Democratic vote in either chamber, Republicans insisted that the new law would buoy their prospects in the midterms. Polling and candidate messaging suggest that has not been the case.
Fewer than half of Americans approve of the law. Republicans favor it overwhelmingly, but Democrats largely oppose it, and independents dislike it more than they like it. On the campaign trail, Republican candidates have focused relatively little on the cuts, and more on issues that rally the conservative base, such as immigration.
Go to Source
Powered by WPeMatico