The best way for President Trump to boost the economy would most likely be to roll back tariffs, not push for a payroll tax cut. This is according to right-leaning analysts and conservative groups.
Trump has made remarks that seem to be in conflict this week about his desire for a payroll tax cut amid increased warning signs of a looming recession. Trump’s most recent position is that he’s not currently looking at it.
Some economists and groups leaning to the right-of-center argue that now is not the time to pursue a reduction in payroll taxes, mainly because that kind of tax cut wouldn’t fix the economy’s trouble spots.
They argue instead that rolling back tariffs would be the most direct remedy for what ails the economy since American businesses are being hurt by Trump’s trade war with China.
“There’s no reason to do [a payroll tax cut] right now, but there is every reason to address tariffs right now,” said Alison Acosta Winters, senior policy fellow at Americans for Prosperity.
Trump said that a payroll tax cut is “something that we think about.” But when he was asked about it the following day, he said it wasn’t being considered.
“I’m not looking at a tax cut now. We don’t need it. We have a strong economy,” the president said Wednesday.
The following day, White House economic adviser Larry Kudlow said in an interview on Fox News’s “Bulls & Bears” that the administration is looking at a “tax cuts 2.0” package to help improve the economy in the long term, but isn’t considering any near-term cuts.
“The idea of a such short-term payroll tax-cut fix — it doesn’t work. It never works, it has no lasting impact,” he said.
Kudlow said a tax-cuts package could be rolled out before the 2020 election and might include lower individual tax rates, lower capital gains rates, changes for noncorporate businesses and relief for residents of high-tax states.
Some GOP lawmakers agree with the sentiment of Trump’s most-recent comments, that the economy isn’t in bad enough shape to necessitate a payroll tax reduction.
“If we’re going to do it because we’re concerned about the status of the economy, I just see in the numbers and the reports coming across my desk, the economy is still vibrant, it’s still strong,” Rep. Tom Reed (R-N.Y.), a member of the tax-writing House Ways and Means Committee, said Tuesday on CNN.
He added that the idea of using a payroll tax cut as a stimulus “should be out there as a tool in the toolbox down the road, but it should not be considered at the present time.”