Daily Tax Report ®

Trump Touts 2017 Tax Cuts But Silent on Prospect of New Ones (1)

Feb. 6, 2019, 3:33 AMUpdated: Feb. 6, 2019, 3:59 AM

President Donald Trump spent a small portion of his 2019 State of the Union address touting the tax cuts Republicans passed at the end of 2017 but was silent on the possibility of more.

During the Feb. 5 speech, the president focused on other issues, including immigration, health care, and trade. But Trump, during a section of the speech focusing on the strength of the U.S. economy, boasted about the 2017 tax law changes.

“We passed a massive tax cut for working families and doubled the child tax credit,” Trump said. “We virtually ended the estate tax, or death tax as it often called, on small businesses, for ranches, and also for family farms.”

The 40 percent tax wasn’t eliminated outright in the tax law (Pub. L. No. 115-97), but the exemption was doubled so that fewer estates face the tax. Before the 2017 changes only about 0.2 percent of all estates paid any estate tax. That fell to fewer than 0.1 percent with the higher exemption.

The higher exemption means that in 2019 an individual can pass up to $11.4 million without paying estate tax at death, and a married couple can pass twice that at $22.8 million. The changes expire after 2025.

Trump also touted the tax overhaul’s repeal of the Affordable Care Act’s individual mandate penalty—a provision that levies a tax on people who don’t purchase health coverage.

House Ways and Means Committee member Lloyd Doggett (D-Texas) told reporters that Trump’s praise of the tax law changes highlights the need for lawmakers to see his tax returns.

“One of the reasons we need to look at his tax returns is to see how much he did get enriched from these provisions,” Doggett said.

House Democrats have been consulting lawyers on how to request the president’s tax returns from the Treasury Department. A House Ways and Means subcommittee will hold a Feb. 7 hearing on presidential tax returns.

No Mention of More Tax Cuts

Not mentioned during the speech was the 10 percent middle-class tax cut Trump floated in the lead-up to the November midterm elections.

The president—to the surprise of many in Congress—announced in late October that he was working on such a tax cut. He even indicated that he would be open to raising the corporate tax rate, which was slashed from 35 percent to 21 percent in the 2017 tax overhaul, to achieve this goal.

Treasury Secretary Steven Mnuchin in December downplayed the tax cut, saying the department had other priorities higher on its agenda, including fixes to the 2017 law.

“He hasn’t talked about it for a while has he?” Sen. Rob Portman (R-Ohio) told reporters after the speech when asked about Trump’s call for a middle-class tax cut.

The key concern moving forward is retaining provisions that were passed in the 2017 overhaul, Portman said. Some, including provisions benefiting craft brewers, expire as early as the end of 2019.

“My hope is that we will now turn our attention to how to retain what we have.”

(Updates with comments from Doggett, Portman starting in seventh paragraph.)

To contact the reporter on this story: Allyson Versprille in Washington at aversprille@bloombergtax.com

To contact the editor responsible for this story: Patrick Ambrosio at pambrosio@bloombergtax.com

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