Trump Pitches Business Tax Cut to Middle Class -- Update

By Richard Rubin Features Dow Jones Newswires

President Donald Trump heads to Missouri on Wednesday to argue that a tax plan that significantly cuts business taxes would benefit middle-class workers, White House officials said.

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The speech in Springfield, which isn't expected to offer new policy details, begins a new phase of the president's direct engagement in the tax debate, said the officials, who spoke to reporters on a conference call on condition of anonymity.

One of the officials said Mr. Trump would make a "very bipartisan speech" that would reflect Americans' frustration that a well-connected few are reaping economic gains.

"We're going to end the rigged system," said the official, echoing language used by groups backed by billionaire industrialists Charles and David Koch and contending that Americans understand how they would benefit if businesses prosper. "We're going to build a tax code that really allows all Americans to have access to the American dream."

Independent analyses of prior tax plans from Republicans and Mr. Trump show the biggest benefits going to high-income households. The Treasury Department and the congressional Joint Committee on Taxation estimate that workers do pay some corporate taxes in the form of depressed wages, but that the bulk of the cost is borne by owners of capital, who tend to be wealthier.

Faced with the political urgency of needing something to show to voters in 2018, Republicans hope to push a major tax bill through Congress by the end of the year.

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They are still working on the legislation and they have a long list of obstacles to overcome. They haven't settled on which tax breaks would go away, or whether they want a net tax cut, or how much revenue the new tax code would raise.

The White House has agreed on a broad framework with lawmakers and is ceding much of the detailed work to Congress while the president makes the public case that business tax cuts would yield faster economic growth and rising wages. Even in the absence of a detailed bill, there are some consistent themes.

Mr. Trump's tax plans since he began running for office in 2015 have emphasized tax cuts, including lower tax rates for corporations, high-income households and businesses that pay taxes on their owners' individual returns. He has also proposed to repeal the estate tax and the alternative minimum tax.

"Those are not exactly populist, keep-rich-people-from-rigging-the-tax-system provisions," said Michael Linden, a fellow at the left-leaning Roosevelt Institute who has advised Democrats on budget and economic policy. "Those are the opposite of those things."

Republicans are proposing to limit or eliminate some tax breaks, including the deduction for state and local taxes that tends to benefit higher-income residents of high-tax states such as New York and New Jersey.

And they have proposed some tax cuts for lower-income households, including a doubled standard deduction. But they have been less clear about what would happen to other tax breaks, including the personal exemption that is especially valuable for families with multiple children.

Mr. Trump will be joined in Missouri by Sen. Roy Blunt (R., Mo.), Gov. Eric Greitens and six U.S. House members from the state, according to the White House.

Write to Richard Rubin at richard.rubin@wsj.com

(END) Dow Jones Newswires

August 30, 2017 07:57 ET (11:57 GMT)