President Trump is considering announcing the details behind a major middle-class tax cut during the presidential debate on Thursday night, according to people familiar with the matter.
”He’s been extremely keen to fully roll out a tax cut, and I think it could happen during the debate itself,” said Stephen Moore, one of Trump’s top outside economic advisers. Moore helped prepare Trump for the first presidential debate in September and has discussed a tax cut for 2021 with Trump on multiple occasions.
Moore said earlier this month that Trump wants to lower the third-lowest income tax bracket to 15% from 22%, create a tax-free savings account for the middle class, and revive his payroll tax cut idea. The goal would be to help people who make less than $100,000 a year, said Moore, who is also a contributor to the Washington Examiner.
Trump is hoping to use the tax cut as a clear point of differentiation between his economic vision and Biden’s.
“I can totally smell what the president is doing. He wants voters to have something concrete they’ll get if they pick him and they don’t get to have if they pick Biden,” said Casey Mulligan, former chief economist for Trump’s Council of Economic Advisers and a professor at the University of Chicago.
Mulligan, who still occasionally advises the White House in an unofficial capacity, said the White House has been researching and gathering information on a tax cut for a few weeks now.
Trump said earlier this month that he would push for another significant tax cut if he is reelected, while bashing Democrats as tax-hikers.
“BIGGEST TAX CUT EVER, AND ANOTHER ONE COMING. VOTE!” Trump tweeted in early October, while hospitalized for COVID-19.
The first tax cut he was referring to was the Tax Cuts and Jobs Act of 2017 that overhauled the corporate tax code and implemented temporary tax cuts for families. Trump announced last year that he’s also planning legislation for a middle-income tax cut if the Republican Party wins back the House of Representatives.
Trump has announced a tax cut right before an election in the past. He unexpectedly called for a new middle-class tax cut before the midterm elections in 2018, which generally caught Republicans on Capitol Hill and elsewhere off guard. The tax cut never became a reality.
Some conservative think tanks have also caught wind of Trump’s desire to push out a tax cut proposal.
“We’ve heard the White House has been trying to figure out how best to design a middle-class tax cut and have some sense of what they’re thinking,” said Garrett Watson, an economist at the Tax Foundation, a center-right think tank.
Watson said Trump’s economists are focused on reducing certain income tax thresholds, forgiving the payroll tax, reducing the capital gains rate, and providing a tax break for those that onshore businesses from abroad.
Some economists, including conservatives, are skeptical that a tax cut would help the economic recovery during the pandemic, though.
“Things like stimulus checks and unemployment aid would have more benefit for those struggling right now,” said Kyle Pomerleau, a specialist in federal tax policy at the American Enterprise Institute, a conservative think tank. “A tax cut could be positive in the long run, but it’s not the best course of action right now.”
A tax cut could increase the income of households, help families pay their bills, and once the virus has subsided, incentivize people to return to work, Pomerleau said. Yet, the U.S. economy is not in that stage of its recovery yet, he added.
