Republicans in Congress walked back a repeated claim by President Donald Trump over the past week that a middle class tax cut will be unveiled before the midterm election. Congress adjourned on Oct. 12 and is not slated to return until Nov. 13, one week after Election Day.
Trump first announced the proposal at a campaign rally for Republican candidates in Nevada on Oct. 20, informing the crowd House Speaker Paul Ryan, R-Wis., and Ways and Means Chairman Kevin Brady, R.-Texas, were developing “a major tax cut for middle income people” to arrive “just prior” to November.
Pressed for details over the next several days, the president stated it would be a “pure 10% tax cut” in addition to the relief already granted by the Tax Cuts and Jobs Act (TCJA), and noted it would apply solely to the middle class, not businesses. He also clarified that the undertaking, purportedly a joint effort between his administration and Brady, was months in the making and would be introduced as a resolution in Congress the following week.
Republican leaders in Congress appeared to be caught surprised by Trump’s claims. Brady’s office could not confirm any such legislation, and instead vowed to work with the administration on a 10% middle class tax cut should Republicans retain control of Congress. Senate Finance Committee Chairman Orrin Hatch was unfamiliar with the specific resolution Trump referred to.
Brady championed a largely symbolic package of tax bills collectively referred to as “Tax Reform 2.0” through the House in September. The legislation would make permanent the individual tax provisions enacted by the TCJA, but this falls far short of the tax cut promised by Trump. The Senate has not considered Tax Reform 2.0 and likely does not have the support to pass it this year. Republicans could revisit the effort in the next Congress if they hold their majorities in both chambers, but it may prove challenging to pass by itself, let alone if additional tax breaks are added.
Managing Director, Washington National Tax Office
+1 202 861 4144
Senior Associate, Washington National Tax Office
+1 202 861 4143
Tax professional standards statement
This content supports Grant Thornton LLP’s marketing of professional services and is not written tax advice directed at the particular facts and circumstances of any person. If you are interested in the topics presented herein, we encourage you to contact us or an independent tax professional to discuss their potential application to your particular situation. Nothing herein shall be construed as imposing a limitation on any person from disclosing the tax treatment or tax structure of any matter addressed herein. To the extent this content may be considered to contain written tax advice, any written advice contained in, forwarded with or attached to this content is not intended by Grant Thornton LLP to be used, and cannot be used, by any person for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.
The information contained herein is general in nature and is based on authorities that are subject to change. It is not, and should not be construed as, accounting, legal or tax advice provided by Grant Thornton LLP to the reader. This material may not be applicable to, or suitable for, the reader’s specific circumstances or needs and may require consideration of tax and nontax factors not described herein. Contact Grant Thornton LLP or other tax professionals prior to taking any action based upon this information. Changes in tax laws or other factors could affect, on a prospective or retroactive basis, the information contained herein; Grant Thornton LLP assumes no obligation to inform the reader of any such changes. All references to “Section,” “Sec.,” or “§” refer to the Internal Revenue Code of 1986, as amended.