Key Republican is talking to the White House about tax plan ‘phase two’

  • by:
  • Source: CNBC
  • 04/09/2021
House Ways and Means Committee Kevin Brady is talking to the White House about a possible "phase two" of the Republican tax plan. 

President Donald Trump has repeatedly hinted at a second part of the tax proposal to follow the law passed in December. Brady wants to bring forward further changes to the tax code this year, his office said, but it is unclear if it would happen before or after November's midterm elections. 

Possible revisions include making individual tax cuts permanent, like the reduction in the corporate tax rate to 21 percent from 35 percent. The GOP made individual tax cuts only temporary in order to reduce the amount by which the plan was estimated to increase budget deficits. 

The GOP would at least partly aim to use the new tax proposal as a tool to boost their fortunes in November's crucial midterm elections. The GOP already planned to use December's law as a key selling point for November. The tax law appeared not to resonate well in one race so far: Tuesday's special House election in Pennsylvania. 

Trump talked up a possible second phase on Wednesday, without specifying what policy steps he wanted to take. 

"We are now going for a phase two," Trump said at an event in Missouri. "We're actually going for a phase two, which will help, in addition to the middle class, will help companies, and it's going to be something, I think, very special. Kevin Brady is working on it with me." 

Larry Kudlow, the longtime CNBC commentator who accepted the role of Trump's top economic advisor, also told CNBC "there may be more action" on taxes. 

Democrats have repeatedly criticized the law as a giveaway to corporations and wealthy individuals at the expense of the middle class. They have partly cited the decision to make corporate cuts permanent in those arguments. 

Earlier this month, Democrats released their own tax proposal. The party said it wanted to reinstate a top income tax rate of 39.6 percent and raise the corporate tax rate to 25 percent.

Republicans could also seek changes to encourage innovation or household savings. It is unclear exactly what those tweaks to the tax code would be.
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