President Donald Trump on Wednesday told workers that they would win under his tax plan, saying it would help the middle class and boost the economy, though critics say it would mainly benefit corporations and the rich. Speaking in an airplane hangar at a Pennsylvania Air National Guard base in Harrisburg with a trailer truck behind him, Trump reiterated the basic points of the nine-page tax cut “framework” he unveiled two weeks ago.
“It’s a middle-class bill. That’s what we’re thinking of. That’s what I want,” Trump said.
“I’ve had rich friends of mine come up to me, and say, ‘Donald, you’re doing this tax plan — we don’t want anything. … Don’t give it to us. Give it to the middle class.’ And that’s what we’re trying so hard to do,” he said.
His remarks came as new Reuters/Ipsos polling showed that more than three-quarters of Americans say the wealthiest Americans should pay more in taxes. The poll found 53 percent of adults “strongly agree” and 23 percent “somewhat agree” that the wealthiest Americans should pay higher tax rates. The Sept. 29-Oct. 5 poll of 1,504 people has a credibility interval, a measure of accuracy, of plus or minus 6 percentage points.
Financial markets have rallied strongly since Trump’s November 2016 election victory, driven partly by expectations that he would cut taxes for businesses, although policy analysts have been skeptical that he would do so. Trump on Wednesday boasted about the rally in markets.
“The stock market is soaring to record levels, boosting pensions and retirement accounts for hard-working Americans. Their values are going up every single day,” he said. Earlier on Wednesday, San Francisco Federal Reserve Bank President John Williams said he was a “little bit discouraged” about the prospects for federal tax reform.
Given the difficulties Congress has had in passing laws this year, Williams, in comments following a speech in Salt Lake City, said he is “losing confidence” that any tax reform will be passed in the next six months or so.
DEMOCRATS DISPUTE “PAY RAISE”
Trump said his plan for cutting corporate taxes could boost wage growth and mean a $4,000 pay raise for the average household, citing research from a White House economic council. Democrats, who oppose Trump’s plan, dispute such claims.
“I have not seen any evidence that even comes remotely close to that,” Richard Neal, the top Democrat on the House of Representatives Ways and Means Committee, said of the $4,000 calculation at a forum on Wednesday in Washington.
Independent analysts have said Trump’s blueprint would provide uneven tax relief, add significantly to the federal budget deficit, and in some cases, benefit the very wealthy. For instance, taxpayers in the highest 1 percent of incomes, making more than $730,000 annually, would get about half of the total benefit from Trump’s plan, with after-tax incomes rising an average of 8.5 percent, according to the Tax Policy Center, a Washington-based nonprofit tax think tank.
Trump on Wednesday said his framework would provide a $500 tax credit to “those who care for an adult dependent or elderly loved one” and that it would substantially increase the child tax credit. No details on those items have been made public. Congressional tax writers in the House and Senate are working to fill in the details of Trump’s framework. Republican leaders hope to pass a bill by January, delivering what would be Trump’s first legislative victory a year into his presidency.
Before that can happen, the Senate and House must open a procedural path for tax legislation by passing a budget resolution. Lawmakers have hoped to do that this month.
CORPORATE, PASS-THROUGH CUTS
The tax framework, developed in secret by a select group of senior Republicans known as the Big Six, calls for cutting the corporate tax rate to 20 percent from 35 percent and creating a new category for pass-through income earned by partners and sole proprietors, which would be taxed at 25 percent, instead of the 39.6 percent top individual rate currently paid by some.
It proposes cutting the top individual rate to 35 percent, but congressional tax writers may opt to create an additional, higher rate for the highest earners.
The plan also proposes eliminating the 40 percent tax on inherited estate assets worth more than $5.5 million, or $11 million for a married couple. A highly placed Republican operative who used to work with senior leadership on Capitol Hill said he did not expect the estate tax repeal to be included in a final package, because the proposal would greatly benefit Trump himself and his family, which would leave the tax reform effort and Trump open to Democratic attack.
He said many Republicans do not see estate tax repeal as crucial, but Republicans have promised wealthy supporters for years that the tax, which they call the “death tax,” will end. Trump on Wednesday offered a different view. Republicans will end “the crushing, horrible, and unfair estate tax,” he said.