President Trump’s election-year “Tax Cuts 2.0” proposal is expected in September and could include a 10 percent tax cut for the middle class as well as a new minimum tax on corporations, according to latest reports. The White House has been talking for months about a new tax proposal timed with President Trump’s reelection campaign but the president’s advisors have been vague on details to date.
Trump often touts the economic benefits of the 2017 GOP tax law that lowered the corporate tax rate from 35 percent to 21 percent, but critics say those benefits have been exaggerated. The economy grew 2.3 percent in 2019, lower than the 3 percent growth predicted by the White House.
Administration officials have made clear that the new tax proposal is still taking shape but have confirmed that it will be aimed at lowering rates and expanding tax-free savings accounts for the middle class. “The White House is studying numerous proposals that will benefit the middle class and the American worker and promote long-term economic growth,” White House spokesman Judd Deere told the Washington Post.
Latest reports suggest that the White House may propose a new minimum tax on corporations to blunt criticism that the 2017 tax law allowed many large corporations to virtually eliminate their federal tax burden and help generate revenue to offset the new middle class tax cuts. The average federal tax rate of the country’s largest 400 corporations was about 11 percent in 2018, the lowest rate since at least 1984, according to the Institute on Taxation and Economic Policy. The administration is also considering a limit on state and local tax breaks for corporations, similar to the $10,000 state and local tax caps imposed on individual taxpayers in the 2017 law.