The Trump administration is considering a 10% tax cut for middle-class Americans and making some other tax reductions permanent as part of a package it intends to propose before the November election, a top White House adviser said on Friday.
One proposal the Trump administration is considering is creating tax incentives intended to encourage U.S. households to invest in the stock market, CNBC reported on Friday, citing four senior administration officials.
The proposal, one of many new tax cuts under consideration, would see a portion of household income treated as tax-free for the purposes of investing outside a traditional 401(k), CNBC said. Under one scenario, a household earning up to $200,000 could invest $10,000 on a tax-free basis, although officials noted these numbers are fluid.
“Nothing’s ruled out,” one senior administration official told CNBC. “Nothing’s been ruled in, either.”
After the Great Recession, the percentage of American households owning stocks fell to 52% from 62% before the crisis, CNBC said, citing Gallup. That percentage reached 55% in 2019, a year when the stock market hit record highs.
The tax break, if enacted, would represent “a pretty substantial amount of money for people” to have for retirement, Stephen Moore, economist at the conservative Heritage Foundation and close confidante of the White House, told CNBC.
“That’s the type of thing that would expand ownership,” Moore said.
Meanwhile, a separate payroll tax cut would be an option only if the strength of the economy drastically declined, CNBC reported, citing two senior Trump administration officials.
Any changes to tax policy would require congressional approval, which would be difficult for the White House to win. Although Trump's fellow Republicans hold a majority in the Senate, the House of Representatives is controlled by the Democrats.
The Trump administration's signature legislative achievement was a tax overhaul in 2017. The massive $1.5 trillion legislation reduced tax rates for corporations and individuals, but the personal income tax cuts were set to expire after 2025.
The tax cuts have been criticized by Democrats for favoring businesses and the wealthy over average Americans. Rolling out a proposal in September could strengthen Trump's hand ahead of the Nov. 3 presidential election.
The White House declined to comment on the report.
The CNBC report came hours after White House economic adviser Larry Kudlow on Friday again suggested that Trump is preparing a middle-class tax cut that will be released by September.
“We’d love to have a 10% middle-class tax cut, and we would love to strengthen and make permanent some of other tax cuts,” the veteran financial guru and former Ronald Reagan adviser told Fox Business' Maria Bartiromo for an interview airing Friday night on her "Wall Street" program. "It'll probably come out some time in September," he added.
This is the second time that Trump has promised a middle-class tax cut ahead of an election. In the weeks before the 2018 midterm election, Trump said he was planning a tax cut but never released the details. Republicans are hoping to use this promise as they campaign this year, but it’s unlikely to become law unless the GOP has unified control in Washington.
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