President Donald Trump and U.S. House of Representatives Republican tax writers discussed “Tax Cuts 2.0” in a July 17 meeting at the White House. The next round of tax cuts—following the Tax Cuts and Jobs Act (TCJA) of 2017—will focus primarily on the individual side of the tax code. This was reiterated by both President Trump and House Ways and Means Chair Kevin Brady (R-Texas) to reporters at the White House before the meeting.
Individual Tax Cuts
The discussion focused, in particular, on how to further strengthen the economy post-tax reform, Rep. Brady said. “We think the best place to start is with America’s middle class families and our small businesses,” he added. Rep. Brady has said that making permanent the individual tax cuts that are set to expire in 2026 under the Tax Cuts and Jobs Act (TCJA) ( P.L. 115-97) is a top priority for Republicans.
Corporate Tax Rate
President Trump is also calling for lowering the corporate tax rate to 20 percent. The corporate tax rate was lowered last December from 35 percent to 21 percent by the TCJA. Rep. Brady told reporters in mid-July that GOP tax writers and the White House were discussing the proposal. While he did not openly commit to the notion of further lowering the corporate tax rate, he did tell reporters that he thinks the President is right that global competitors will likely respond in kind to last year’s tax reform.
Capital Gains Tax Cut
Another major provision that was recently brought forward is cutting the capital gains tax, something the administration is studying.
“There’s been a great deal of interest in this provision for a long time,” White House spokesman Hogan Gidley told reporters traveling aboard Air Force One this week, according to a National Public Radio report.
Treasury Secretary Steven Mnuchin told the New York Times that if Congress won’t cut taxes on capital gains, the administration might try to do so on its own. Meanwhile, critics warn that a cut like this would only add to a federal deficit that’s already approaching $1 trillion a year.
Tax Cuts 2.0 Timeline
The House is expected to vote on the Tax Cuts 2.0 package in September, Rep. Brady told reporters at the White House in mid-July. Additionally, he said he anticipates the Senate setting a timetable as well.
Brady estimated that a draft of the tax package would be released publicly in August.
At this time on Capitol Hill, the Tax Cuts 2.0 package is not expected to fare well in the Senate. The package would need at least nine Democratic votes to clear the chamber, and many Democrats are quite vocal in their opposition.
“The GOP tax scam was a huge tax break for big corporations,” Sen. Tammy Baldwin, D-Wis., said in a July 17 tweet. “We should reward work, not just wealth.”
While Democrats remain outspoken against the TCJA for primarily benefiting corporations, Republicans are hopeful for Democratic support, just prior to midterm elections, on a measure that focuses on individual tax cuts.
It should lead to a very interesting pre-midterm election this year.