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Trump claims future tax code reform will benefit middle class

Since the 2016 Republican presidential primaries, President Donald Trump has called for a change to the U.S. tax code. Recently, Trump revealed more information about the tax code reform that he wants. He said that the changes would benefit the middle class, rather than the wealthy. According to Bloomberg, Trump told reporters, “I think the wealthy will be pretty much where they are. They have to go higher, they’ll go higher, frankly. We’re looking at the middle class and we’re looking at jobs.”

In the past, Democrats have criticized Republican efforts to reform the tax code, claiming that their proposals favored wealthy Americans and corporations. However, last Wednesday, Trump had dinner with Democratic congressional leaders Nancy Pelosi and Chuck Schumer.

This action was mostly likely taken so that both parties could discuss common issues with the tax code that they agreed on, and garner support for Trump’s tax plan in the process. A statement released by the White House claimed that Trump had a “constructive working dinner” with the two top Democrats, discussing not only tax policy, but border security, infrastructure, trade and undocumented immigrants, according to Bloomberg.

Until recently, the Trump administration had excluded Democrats in its discussion of tax code reform. Rather, it was discussed between members of his administration and the Republican Majority Congress, but they have yet to release any detailed plan. Trump surprised Republicans last week when he made a deal with Schumer and Pelosi regarding the U.S. debt limit and federal spending.

As a result, staunch conservatives are worried that Trump is kowtowing to the Democrats. In response, Trump said, “I’m a conservative, and I will tell you I’m not skeptical. And I think that if we can do things in a bipartisan manner, that’ll be great. Now it might not work out.”

Trump’s statement regarding the tax code benefiting the middle class over the wealthy runs contrary to the suggested policies of other Republicans. According to Bloomberg, some Congressional Republicans are willing to consider Trump’s stance, like Rep. Mark Meadows of North Carolina, who said, “I’m willing to look at everything.”

In response to Trump’s statement, Rep. Tom Reed, a New York Republican, applauded the president for “reaching across the aisle.” However, other members of the GOP have doubled down on their ideas for reform in response to Trump. House Ways and Means Chairman Kevin Brady stated his goal of providing tax cuts to all income brackets. According to Bloomberg, Brady, a Texas Republican, said, “My goal is to lower taxes on every American if it’s possible.” Sen. Ted Cruz called for replacing the current system, where people with higher incomes pay higher tax rates, and there is a low, flat rate for individuals and families. He also gave a speech Wednesday on his goals for tax legislation during an event sponsored by the Tax Foundation, a Washington policy group. Cruz “called for simplifying the tax code, cutting tax rates to spur growth and, for individuals, instituting a single tax rate in place of the existing seven,” according to Bloomberg.

On Wednesday, Republicans stated their intention to release a document in two weeks which would outline the reform legislation that Chairman Brady and the Senate Finance Committee would write. If the document is similar to prior proposals from GOP members, it would largely be a boon for America’s highest earners. Nevertheless, it is uncertain what the final tax legislation will look like.

In a recent meeting, House Republicans claimed there was no agreement yet on where individual tax rates, or the corporate tax rate, should be. For example, while House members discussed a corporate tax rate of 20 percent, Trump stated on Wednesday that he wants a corporate tax rate of 15 percent.

Despite Trump’s recent stance, it appears unlikely that the middle class will benefit from the planned Republican legislation. All previous discussion concerning tax code reform included provisions that would largely benefit only wealthy Americans. In the past, Trump and House Republican leaders have suggested replacing the current seven individual tax rates with only three, and reducing the highest rate from 39.6 percent to 35 percent, a decision that economists have agreed would constitute a tax cut for the wealthy. The elimination of the estate tax would also serve to their benefit.

According to Bloomberg, an analysis by the Washington-based Tax Policy Center found that as a result of the provisions suggested in the one-page tax outline released by the White House in April, almost 40 percent of the tax cuts would have gone to the top 1 percent of earners. As a result, those households would enjoy an average annual tax cut of $270,000.

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