The Trump administration and congressional Republicans are working together on crafting a new, 10 percent middle-income tax cut. The House’s top tax writer has said that a new 10 percent tax cut measure will be advanced in the coming weeks.
Middle-Income Tax Cut
President Donald Trump announced on October 22 that a new 10 percent tax cut would soon be unveiled that will focus specifically on middle-income taxpayers. “President Trump is determined to provide further tax relief for middle-class families,” House Ways and Means Committee Chairman Kevin Brady, R-Tex., said in an October 23 statement. “We will continue to work with the White House and Treasury over the coming weeks to develop an additional 10 percent tax cut focused specifically on middle-class families and workers, to be advanced as Republicans retain the House and Senate,” Brady added.
Comment. Notably, Brady is essentially highlighting in his statement that any such additional tax cut measure would require a Republican majority for congressional approval. As November midterm elections near, there is “talk” on Capitol Hill that Republicans may lose control of the House.
The additional 10 percent tax cut for middle-income taxpayers would aim to build upon the individual tax cuts enacted last December under the Tax Cuts and Jobs Act (TCJA) (P.L. 115-97). To that end, the House passed a “Tax Reform 2.0” package last month, which would make permanent the TCJA’s individual and small business tax credits. The TCJA’s individual tax cut provisions were enacted temporarily through 2025 in accordance with certain Senate budget rules. Although the TCJA did not receive one Democratic vote, the Tax Reform 2.0 package did clear the House with some bipartisan support.
At this time, the House’s Tax Reform 2.0 package is not expected to be approved by the Senate in its current form. The retirement savings and business innovation bills of the three-bill package are considered likely on Capitol Hill to receive Democratic support. However, Democrats are not expected to support Republicans’ legislative efforts to make permanent the individual and small business tax cuts, which were enacted by legislation (TCJA) that they did not support.
Further, it appears unlikely that an additional individual tax cut would garner enough Democratic support in the Senate. Moreover, if Republicans do not retain a majority in the House and Senate, both of the GOP legislative efforts to extend the TCJA individual tax cuts and add another 10-percent tax cut seem next to impossible.
Meanwhile, Democratic lawmakers continue to criticize the TCJA for primarily benefiting wealthy individuals and corporations, now citing to Republicans’ push for a new middle-income tax cut as proof. “Trump promises that the [TCJA] would increase wages by $4,000. It didn’t. This [new tax cut] is nothing more than empty rhetoric and an admission by the Trump administration that the Trump tax law only helps corporations and the donor class,” Senate Finance Committee (SFC) ranking member Ron Wyden, D-Ore., said in an October 23 tweet.
However, SFC Chairman Orrin G. Hatch seemed to push back on his Democratic colleague’s notion that the TCJA did not benefit middle-income taxpayers. Hatch praised the TCJA in an October 23 press release for generating a “58 percent tax cut” for the average American family of four earning $73,000 a year. “While Democrats might call a 58 percent tax reduction, ‘crumbs,’ $2,000 means more money to put toward an education, save for retirement or use for a well-deserved vacation,” the SFC press release added.
Additionally, Hatch has signaled his willingness to work with the Trump administration in delivering more middle-income tax cuts. “Hatch welcomes efforts to build on tax reform’s success by continuing to deliver benefits to middle-class Americans and will work with Finance Committee members and the administration to determine how to best achieve that shared goal,” the October 23 press released noted.
By Jessica Jeane, Senior News Editor