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Trump promises to unveil ‘resolution’ for middle-class tax cut in midterm messaging move

President Trump said on Oct. 22 that he will propose a middle-income tax reduction of "about 10 percent" to Congress within the next two weeks. (Video: The Washington Post, Photo: Jabin Botsford/The Washington Post)

President Trump on Tuesday said Republicans would unveil a resolution pledging congressional action sometime after the midterm elections on a 10 percent middle-class tax cut.

The resolution would be a nonbinding measure that offers no guarantees of a future tax cut, and details of the proposal remained vague. But Trump and White House officials say such a promise would have political value coming just ahead of midterm elections in which the original GOP tax law has failed to win public support.

“It’s going to be a tax reduction of 10 percent for the middle class,” Trump told reporters in the Oval Office. “Business will not enter into it, and this will be on top of the tax reduction that the middle class has already gotten, and we’re putting in a resolution probably this week.”

Trump disputed the suggestion that he was embracing a new middle-class tax cut because the original GOP tax bill, which became law this year, did not do enough for the middle class.

White House economic adviser Larry Kudlow on Oct. 23 said people should take President Trump "seriously" on his tax cut proposal. (Video: Reuters)

That legislation lowered individual tax brackets at all levels but did much more to help corporations and wealthy Americans, according to nonpartisan analyses of the legislation. The corporate tax cuts in the law are permanent, while the individual cuts are set to expire in less than a decade unless Congress acts to extend them.

In June, a Monmouth poll found 34 percent of respondents supported the tax cut law, while 41 percent opposed it.

Trump claimed that all the middle-class tax relief possible had been squeezed into the original bill. During debate over the bill, lawmakers proposed versions that would have extended more relief to the middle class by shrinking tax cuts for corporations, but they were rejected.

“I didn’t think we could get any more than we got. We got the max,” Trump said. “And now because of the fact that the economy is doing so well, we feel that we can give up some more. I couldn’t have gotten that extra 10 percent when we originally passed the plan.”

Trump’s comments were his lengthiest discussion of a new tax idea that he raised at a rally Saturday, surprising many lawmakers and tax experts who have remained uncertain what the president has in mind. On occasion Trump has suggested that he expected action ahead of the elections, even though Congress has adjourned until later in November.

Trump told rallygoers in Houston on Monday night, “It’s going to be put in next week, 10 percent tax cut.”

Any action on additional tax legislation is also likely to be contingent on Republicans retaining their congressional majorities in elections two weeks from now.

The original tax law is projected to add at least $1 trillion to the deficit over the next decade. Trump suggested Tuesday that the new tax cut will not add to the deficit, saying it “will be a net neutral, because we’re doing other things which I don’t have to explain now, but it’ll be pretty much of a net neutral.”

White House officials have debated whether to offset the costs with revenue increases and spending cuts elsewhere to limit the impact on the deficit.

The White House has not defined who it considers to be in the middle class or how they would prevent many businesses from taking advantage of the change, as many companies pay their taxes through the same tax code as families.

If the White House were to define the middle class as any household earning less than $200,000, a 10 percent tax cut would cut would lower taxes by roughly $61 billion a year, according to Internal Revenue Service data. That could also mean adding more than $600 billion to the deficit over 10 years — unless Republicans found other tax raises or spending cuts to pay for it. The White House also could target the tax cuts toward people at lower income levels.

The White House and many Republicans said the massive tax cut law they passed last year would ensure a big win in the midterm elections, but polling has suggested a lukewarm reception from voters. Democrats have relentlessly accused Republicans of attempting to take away government support from middle-income Americans while enriching the wealthy.

There are also growing signs Trump is seeking to change the White House’s economic message at a time when the stock market has tumbled sharply.

The potential symbolic vote for a future tax cut is one of several strategies under discussion, and White House officials say they hope to coalesce around one in the next few days.

Congress routinely passes resolutions aimed at putting lawmakers on record in favor or against various causes, although often they are on minor issues.

Trump has urged GOP leaders for months to consider additional ways to cut taxes, and the House has passed a bill that would make permanent several temporary tax cuts in last year’s law. The Senate so far has not acted on that legislation.

Key details of an eventual tax plan remain under review. Trump said he had been working on the plan for months with House Ways and Means Committee Chairman Kevin Brady (R-Tex.), although lawmakers have largely tried to direct any questions about new proposals back to Trump.

In a statement Tuesday, Brady said: “We will continue to work with the White House and Treasury over the coming weeks to develop an additional 10 percent tax cut focused specifically on middle-class families and workers, to be advanced as Republicans retain the House and Senate.”

Republican leaders have said their tax cut plan last year has led to economic growth this year, but they also have acknowledged that most Americans remain opposed to the plan.

“They are just sensitive to the Democratic attack that the rich benefited from the first tax cut” more than the middle class, said Stephen Moore, an economic adviser to Trump during the 2016 campaign.

Moore said that such an approach might have made more sense if it were done weeks or months ago but that now it is too close to the midterm elections — and lawmakers won’t even return to Washington until after the public votes on who will control Congress next year. He said Republicans should have spent more time in recent weeks talking about how their economic agenda was helping the middle class.

“It’s a messaging problem for Republicans,” Moore said. “They are just poor at selling their own agenda.”

The midterm elections are being fought on multiple fronts. Trump had sought for months to make the vote hinge on the strength of the economy, but many Americans are still resistant to the tax cut law.

Trump has recently shifted his tactics, focusing on what he says are threats from immigrants coming to the United States.

Democrats, meanwhile, have tried to make the protection of health-care benefits a central focus of their midterm message, forcing Republicans to pledge support for health-care policies they have spent years trying to unravel.

At the heart of the Democrats’ health-care message is an attempt to win back middle-class voters, many of whom abandoned the party to support Trump in 2016. And some Democrats are crafting their own plans to cut taxes for the middle class, ideas they began promoting before Trump mentioned his initiative several days ago.

Sen. Kamala D. Harris (D-Calif.), who is considered a potential presidential candidate in 2020, this month advanced a plan that would extend $500 monthly tax credits to working families who earn less than $100,000 a year.

Other Democrats are attacking Trump’s new pitch as a last-minute attempt to try to rebrand last year’s huge tax cut, which some Democrats have pledged to try to undo in part if they take power.

“This empty rhetoric is an admission by Donald Trump that his tax law only helps corporations and the donor class,” said Sen. Ron Wyden of Oregon, the top Democrat on the Senate Finance Committee. “The middle class will see straight through this scam just like they did with Trump’s broken promise to deliver $4,000 wage increases.”