President Trump has been nominated to run again as the Republican Party’s candidate for president, and part of his main economic platform centers around new promises to cut middle-class taxes even further.
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During a speech Monday in North Carolina, Trump took aim at his Democratic opponent Joe Biden and his running mate Sen. Kamala Harris over their tax policies, while detailing a plan to provide tax credits for companies that bring jobs back from China and other countries.
“This is the only election where somebody said ‘we’re going to raise your taxes,’ they’re going to raise your taxes – quadruple your taxes,” Trump said.
Biden has proposed a slew of measures that would increase rates for both corporations and the wealthiest Americans, as the former vice president advocates for the need to create a more progressive and equitable tax code.
There are a number of tax policies that the administration is considering implementing if Trump is reelected — here’s a look at some of the main proposals.
While the White House intends to implement a payroll tax deferral from September through the end of the year, Trump says he will not only forgive deferred payments next year, but wants to eliminate the payroll tax altogether.
To ensure Social Security is still adequately subsidized, the president has said the program will receive money from the general fund.
White House National Economic Director Larry Kudlow has estimated that the policy would save the average person about $1,200 during the course of four months. Those calculations appear to be based on someone earning roughly $58,000 per year.
Capital gains tax cut
Another potential tax cut that the president has spoken about frequently throughout the past several months is the capital gains tax rate.
Capital gains taxes are paid on the difference between what an individual originally paid for a property or investment vs. what it sells for at the time it is sold.
The current top capital gains rate sits at 23.8 percent. Trump has said he would consider a rate as low as 15 percent.
The measure was not included in Trump’s recently announced executive actions to provide financial relief to American households afflicted by the coronavirus crisis.
Treasury Secretary Steven Mnuchin told FOX Business he believes legislation should be approved by Congress.
On the other hand, Biden has proposed taxing capital gains at the same rates as ordinary income – the top rate under his proposal would be 39.6 percent.
Proponent of cutting the capital gains tax rate say it would encourage investment, while critics say it is a move that would more heavily favor wealthy individuals.
Tax Cuts 2.0?
Prior to the outbreak of the coronavirus pandemic, the White House discussed a Tax Cuts 2.0 package that was initially expected to be unveiled before the election.
Trump said on multiple occasions the tax package would include a “substantial” tax cut for middle-income Americans.
Kudlow said during an interview with CNBC that a 15 percent tax rate for the middle class sounded like “a pretty good idea.” While some middle-class Americans may already be paying a 12 percent rate, others are paying 22 percent or 24 percent — which means a potential cut to a 15 percent rate would save them a lot of money.
Additionally, the administration was seeking to make some measures permanent from the Tax Cuts and Jobs Act that are set to sunset in 2025 — on both the individual and corporate sides.
It is unclear what the future of this tax package is due to the current economic conditions.
The most prominent features of Tax Cuts and Jobs Act included a reduction in personal income tax rates, a doubled standard deduction and a $10,000 cap on state and local tax deductions.
The Tax Cuts and Jobs Act also reduced the corporate tax rate to 21 percent, from 35 percent, while a 20 percent deduction for qualified business income was established.
The Child Tax Credit was raised to $2,000, and personal exemptions were eliminated.
The exemption for the Alternative Minimum Tax was raised and the phase-out threshold was increased. The exemption for the estate tax was also effectively doubled.