Trump Says He's Open to Raising Taxes to Offset Middle-Class Cut
(Bloomberg) -- President Donald Trump said he’s open to raising some tax rates to help pay for a bigger tax break for middle-class Americans.
“If the Democrats come up with an idea for tax cuts -- and I’m a big believer in tax cuts -- I would absolutely pursue something even if it means some adjustment,” Trump said during a press conference at the White House on Wednesday. When the reporter asked if that could include a corporate rate increase, Trump said “Yeah.”
One of the centerpieces of Trump’s 2017 tax overhaul was slashing the corporate rate to 21 percent from 35 percent. Changes for individual taxpayers, such as rate cuts and an almost doubling of the standard deduction, were set to expire at the end of 2025 for budget reasons.
Less than a week before the midterm elections, the White House and chief House tax writer Kevin Brady said they would start working on a 10 percent tax cut for middle-income families next year if they maintained control of Congress. The joint statement followed almost 10 days of confusion after Trump caught Republican leaders off guard by talking about introducing a 10 percent middle-class break soon.
Democrats have criticized the 2017 tax law for cutting taxes for corporations and the wealthy too much, while not directing enough relief to middle-class families.
Soon-to-be House Ways and Means Committee Chairman Richard Neal has repeatedly said he wants hearings on the GOP tax law to give those he says were shut out of the overhaul debate a chance to be heard. Democrats plan to use the hearings to focus on middle-class tax cuts, and how the law could be tweaked, including an incremental increase in the corporate tax rate.
Still, even if Trump and the Democrats can agree on a plan, a tax bill would need to pass the Republican-led Senate, where members tout the corporate rate reduction as a key feature of their legislative win. They’re unlikely to support any effort to change it.
During Wednesday’s press conference, Trump declined to specify how much of an increase he would support. But he’s said he wants the middle-class tax cut to be revenue neutral. Depending on the design of the 10 percent cut he has floated, it could cost between $410 billion to more than $2 trillion. To completely offset that cost would require raising the 21 percent corporate rate several percentage points.
Last year, the White House had insisted a 20 percent corporate rate was a requirement for the president, before Trump started signaling openness to a higher rate.
Trump acknowledged he doesn’t have the power to drive the tax overhaul debate with Democrats in the House this time around.
“I would love to see a tax cut for the middle class now,” Trump said. “That’s going to be their decision.”
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