Trump doubles down on capital gains, payroll tax cuts to stimulate economy
U.S. economy lost 20.5 million jobs in April
President Trump says while the strong economy was artificially turned off due to coronavirus, he is optimistic the U.S. will recover from it by next year and he's hopeful he can get a payroll tax cut or a capital gains tax cut.
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President Trump is calling for two tax cuts as he eyes new ways to provide relief to workers as tens of millions lost their jobs last month.
In a briefing with the media Friday, Trump said his administration has been “throwing money” at the problem as it considers additional stimulus measures.
“One thing we could do is a payroll tax cut,” Trump said. “That’s one thing a lot of people would like to see. Another thing they’d like to see is a capital gains tax cut.”
CORONAVIRUS STIMULUS PHASE FOUR PROPOSALS INCLUDE THESE TAX POLICIES
Former Trump Senior Economic Adviser Stephen Moore has been calling for a payroll tax suspension as a means to accelerate growth without adding to the federal deficit.
The payroll tax is paid separately from federal income taxes and funds Social Security and Medicare. Employers and employees each pay 6.2 percent for Social Security and 1.45 percent for Medicare, and an additional 0.9 percent is levied on the highest earners.
A suspension of the payroll tax could incentivize employers to hire more workers by reducing their payroll costs while giving employees a boost in their paychecks.
However, there are concerns that Social Security and Medicare funding would be harmed in the process.
It has been previously suggested that companies would eventually be responsible for repaying the money to Social Security and Medicare, just at a later date.
CORONAVIRUS STIMULUS: TRUMP WANTS BUSINESS MEALS, ENTERTAINMENT TO BE TAX DEDUCTIBLE AGAIN
Meanwhile, reducing capital gains taxes has traditionally been favored by Republicans as a means to encourage investment. Capital gains taxes are paid on the difference between what an individual originally paid for a property or investment vs. what it sells for -- at the time it is sold.
The current top capital gains rate sits at 23.8 percent.
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As previously reported by FOX Business, administration officials have discussed a handful of other tax proposals as potential candidates for phase four stimulus measures. In addition to Trump’s favored policies, White House economic adviser Larry Kudlow has talked about expanding full, immediate expensing, and Trump has called for reinstating the full deduction for business meals and entertainment.
Experts expect the debate in Congress moving forward will be centered on whether to continue spending in order to stimulate the economy – or to transition to other pro-growth measures. The federal government has already spent nearly $3 trillion to combat the devastating effects of the pandemic.
Despite a bleak jobs report on Friday, detailing the loss of a record 20.5 million jobs in April, Trump said he thinks 2021 has a chance to be one of the best years economically the U.S. has ever had due to pent-up demand.
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