by Ahead of the mid-term elections, politicians in Washington are trashing out proposals that aim to make permanent the tax cuts voted last December.The House Republicans have launched a new plan to cut taxes, mostly revolving around the idea of making recent cuts for households permanent (they are currently scheduled to lapse in 2025).This willingness by Congress to continue the tax-cutting effort, even if uncertain, could reassure a US business community that has been receiving mixed signals lately: tax reform and deregulation on the one hand, but tariffs and protectionism on the other, have it wondering about the coherence of the Trump administration’s economic policies.The new proposals are much less ambitious than the ones rolled out last December. Importantly, the new tax proposals do
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Thomas Costerg considers the following as important: Macroview, US budget deficit, US budget policy, US tax cuts
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Ahead of the mid-term elections, politicians in Washington are trashing out proposals that aim to make permanent the tax cuts voted last December.
The House Republicans have launched a new plan to cut taxes, mostly revolving around the idea of making recent cuts for households permanent (they are currently scheduled to lapse in 2025).
This willingness by Congress to continue the tax-cutting effort, even if uncertain, could reassure a US business community that has been receiving mixed signals lately: tax reform and deregulation on the one hand, but tariffs and protectionism on the other, have it wondering about the coherence of the Trump administration’s economic policies.
The new proposals are much less ambitious than the ones rolled out last December. Importantly, the new tax proposals do not include the fine tuning of the December tax cuts sought by businesses. For now, this proposal does not include Trump’s idea of cutting the corporate tax rate further (to 20%, from 21%). Further reductions in personal tax rates and/or a widening of personal tax brackets is another idea that some Republicans have floated in recent months because of concerns that ‘tax cuts 1.0’ were too far tilted towards corporates. Yet such changes are not part of the current tax cut proposal.
There is much skepticism in the US press around ’tax reform 2.0’. The Wall Street Journal, among others, wrote that it is “unlikely to draw enough Democratic votes to become law”. Another potential dampener is the lack of appetite for a further round of tax cuts among senators, including Republican ones. The proposal is widely seen as a carrot held out to voters ahead of the November midterm elections when the House of Representatives and one third of the Senate will be renewed.
Still, the tax cuts could make for positive headlines in the US in the coming weeks, potentially helping to assuage a business community increasingly concerned about the Trump administration’s direction of travel. Further tax cuts could help offset the damage done by trade tariffs.
