President Donald Trump’s surprise call to cut middle-income families’ taxes by 10 percent could mean top earners get a break, too.
It’s still unclear how Trump will propose to reduce the tax burden on middle-class Americans, but one of the most straightforward ways would be to lower rates by 10 percent for single filers making up to $82,500. U.S. income tax rates are graduated and income dollars get taxed in chunks as they move up through the brackets -- which means wealthy Americans would also get to apply the reduced rate on their first dollars of income.
“A millionaire gets the same size tax cut,” said Kyle Pomerleau, an economist at the conservative Tax Foundation.
Such a move would undermine the president’s last-ditch effort to appeal to middle-class voters before they head to the polls on Nov. 6. Whatever form his 10 percent plan takes, it’s tacit acknowledgement that the 2017 tax overhaul isn’t proving as popular as Republicans had hoped -- and isn’t the boon for middle-class families that was promised.
Trump first floated the middle-class tax plan on Saturday after a rally in Elko, Nevada, which caught Republican lawmakers off guard. The president said Monday a plan would be unveiled in the next week or so that would entail “a middle-income tax reduction of about 10 percent.” He added that Congress would vote on it after the November elections.
A White House spokeswoman said Trump wants his middle-class proposal to be added to a separate package of tax bills the House approved in September dubbed Tax Reform 2.0 that would make all changes for individuals in last year’s tax law permanent. The Senate hasn’t shown any interest so far in taking up the House tax bill.
Given the potential for the House to flip to Democratic control after the elections -- and what’s expected to be a slim Republican majority in the Senate -- it’s unlikely tax legislation would be approved during a lame duck session. Spokesmen for House Speaker Paul Ryan and Ways and Means Chairman Kevin Brady, who the president said were working on the legislation, referred questions on plan details to the White House.
At a rally in Texas on Monday night, Trump told the crowd, “In fact, I just left Kevin Brady. We’re going to be putting in a 10 percent tax cut for middle income families. It’s going to be put in next year. In addition to the big tax cuts you’ve already gotten."
Last year’s tax law slashed income tax rates, with top earners seeing a cut to 37 percent from 39.6 percent. For individual filers, income up to $9,525 has a 10 percent rate, up to $38,700 faces a 12 percent rate and up to $82,500 sees a 22 percent rate. A cut of about 10 percent could move those rates down to 9 percent, 11 percent and 20 percent, respectively.
A new round of tax cuts without offsets would further add to the deficit, which reached $779 billion, a six-year high, in Trump’s first full year in office.