White House economic adviser Larry Kudlow reportedly is spearheading an effort to have President Donald Trump campaign for re-election proposing a 15 percent tax rate for the American middle class.
The Washington Post reported that the National Economic Council Director is widely seen as a leading proponent of the new 15 percent rate.
“The president has asked me to pursue something called Tax Cuts 2.0,” Kudlow told CNBC, adding it is “way too soon” to get into specifics of a plan.
“We’re in very preliminary stages right now,” the veteran financial guru and former Ronald Reagan adviser said, noting that he has spoken to lawmakers and administration officials about a tax proposal. “This thing will not be completed for many months, as I say, it will be released as a strategic pro-growth document for the campaign. We want to see middle-income taxpayers get the lowest possible rates,” said Kudlow, who worked as Reagan’s budget deputy between 1981 and 1985.
The Post said it is unclear if Trump has approved the idea, but the president “has pushed aides to develop a simple tax message for 2020 focused on middle class tax relief.”
Kudlow told the Post that “[Trump] wants to afford as much relief and simplicity as possible for middle-income taxpayers.”
The Post said that reducing the tax rate to 15 percent for middle-class taxpayers would lower taxes by hundreds of billions of dollars. “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 to federal programs. The GOP tax law of 2017 already added more than $1.5 trillion to the national debt,” the report said.
Currently, there are seven tax brackets that increase up the income ladder: 10 percent; 12 percent; 22 percent; 24 percent; 32 percent; 35 percent; and 37 percent, the Post said. The existing 22 percent rate kicks in for single Americans earning more than about $39,000, while the 32 percent rate applies to single Americans earning more than $160,000.
Kudlow said in September that the Trump administration plans to unveil a tax cut plan in mid-2020, saying it would be targeted to giving significant relief to the middle class.
Speaking to reporters at a retreat for Republican lawmakers, Kudlow offered no details on what he has termed “Tax Cuts 2.0,” Reuters explained.
“We will gather together the best ideas from the Hill (Congress), the administration and outside folks to provide a significant new round of middle class tax relief,” Kudlow said last month, adding, “This is not a recession measure at all.”
Kudlow did not specify how the tax cuts would be fashioned or how deep they might be.
Kudlow said the initiative would probably be rolled out “sometime in the middle of next year,” which would be just months before the November 2020 presidential and congressional elections.
Democrats have roundly criticized the 2017 Republican tax cut law as being heavily skewed toward the wealthy. Democrats opposed the measure and won enough seats in last November’s mid-term elections to take control of the House of Representatives from Republicans.
Talk of a payroll tax cut that has been circulating also faces opposition from some Republicans, who fear worsening an already deep U.S. debt problem. Democrats also fear it would contribute to a drop in revenue for Social Security and Medicare retirement and health-care programs.
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