The voices of Tax Policy Center's researchers and staff
In his press conference on Wednesday, President Trump raised more than a few eyebrows by saying he’d be willing to support “adjustments” to the Tax Cuts and Jobs Act (TCJA) to help finance the new round of middle-class tax cuts he promised just before the election.
Of course, this could easily be one of the president’s many evanescent policy promises—here today and gone in an hour. But what if Democrats, soon to be in control of the House, took him up on the offer? What if, let’s say, they proposed a major expansion of the Earned Income Tax Credit (EITC), an efficient way to cut taxes for working families and the middle-class (whoever you think they are). Or voted to extend some—but not all—of the individual income tax cuts in the TCJA. And then, citing the president, paid for it by raising taxes on corporations and high-income individuals.
Democrats could do all of this while replaying, over and over, Trump’s words. This is what he said: “If the Democrats come up with an idea for tax cuts, which I am a big believer in tax cuts, I would absolutely pursue something even if it means some adjustment." Then, asked if that meant raising taxes on corporations and high-income individuals, he replied “It could be.”
It opens the door for a powerful political message for Democrats: “We are willing to work with the president when he is right. We completely agree with his proposed trade-off. So we are doing just what the president asked: Cutting taxes for hard-working middle-income Americans and paying for them by raising taxes on the undeserving rich and tax-dodging corporations.”
It would press four important political buttons: A tax cut for most voters, which can be popular if framed properly. A tax increase on the rich and on corporations, also popular if framed right. A heavy dose of apparent bipartisanship, even if it is, let’s say, less than sincere. And even a bit of fiscal prudence, which voters like—as long as it doesn’t raise their own taxes or cut spending that benefits them.
If the House could pass such a bill, it would leave the Republican-controlled Senate in something of a bind. The Senate could ignore the measure or turn it into a very different looking tax cut. That would likely result in stalemate. But which side of the argument would you rather have: The “I tried to cut your taxes but the other guys stopped me ” bumper sticker or the “I won’t cut your taxes because I’d rather preserve low taxes for the job creators?”
Democrats would take a risk with such a strategy. The biggest: The bill could actually pass and President Trump could sign it, giving him a big win in the midst of his reelection campaign. In that case Trump and House Democrats would benefit, Senate Republicans would leave some of their biggest supporters apoplectic (Grover Norquist phone home) , and US corporations would end up paying higher taxes.
Is any of this likely to happen? Probably not. The president will move on to other things and House Democrats likely will focus on a much less ambitious short-term tax agenda and save the middle-class tax cut issue for the 2020 campaign. But, admit it, the scenario is fun to think about.
Posts and comments are solely the opinion of the author and not that of the Tax Policy Center, Urban Institute, or Brookings Institution.
Evan Vucci/AP Photo