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Tax Cut 2.0 Package Is Three Months Out, Trump Says

Posted on Jan. 22, 2020

The White House plans to introduce a new round of tax cuts aimed at the middle class within 90 days, according to President Trump.

Any action on the coming tax package would have to wait until after the upcoming November election and would be conditional on Republicans holding the White House and Senate and retaking control of the House, Trump said January 21 in an interview with The Wall Street Journal.

The new timeline is the latest in a long string of pronouncements by Republicans of a second phase of tax cuts stretching back to just weeks after the 2017 tax cuts were enacted. Those discussions took a back seat when Republicans lost control of the House in the 2018 midterm elections.

House Ways and Means Committee ranking minority member Kevin Brady, R-Texas, recently told Tax Notes that discussions between him and the White House on the package are still in the early stages.

Other than making the expiring provisions of the Tax Cuts and Jobs Act permanent, it’s unclear what proposals might end up in the package. Republicans have broadly emphasized that the tax cuts would be targeted to middle-income taxpayers and small businesses.

Both Brady and National Economic Council Director Larry Kudlow have suggested that the proposal could involve lowering individual income tax rates, and Kudlow has further suggested that reductions in the capital gains tax rate, exemptions from the $10,000 state and local tax deduction cap for certain small businesses, and adjustments to income tax brackets are on the table.

White House acting Chief of Staff Mick Mulvaney has hinted that Trump would like to see the corporate tax rate lowered even further than the TCJA's 14 percentage point rate cut. The White House’s first tax reform draft in early 2017 called for a 15 percent corporate rate.

Asked what proposals were under consideration, White House spokesman Judd P. Deere would only say that the administration “is studying numerous proposals” that would benefit middle-income taxpayers and American workers and support long-term economic growth.

The White House has also floated the idea of unilateral executive action to index capital gains to inflation, as well as cutting payroll taxes as a way to juice the economy, although Trump appears to have since soured on both ideas.

Follow Jonathan Curry (@jtcurry005) on Twitter for real-time updates.

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