- The White House is studying whether it has authority to sidestep Congress and cut taxes unilaterally, The New York Times reported.
- Congress holds power to set tax policy and waive taxes, and any measure to cut taxes could trigger blowback from both Democrats and Republicans.
- The executive branch has authority todefer=”defer”taxes, as it did when it instituted a payroll-tax holiday.
- President Trump supports a capital-gains tax cut, which experts say would mostly benefit wealthy households.
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The White House is determining whether President Donald Trump has the authority to sidestep Congress and cut taxes on his own,The New York Times reported.
The newspaper cited a senior administration official granted anonymity. Such a move to cut personal income or business taxes, however, does not appear to be on the horizon so far.
With the collapse of stimulus negotiations, the president has started signalling he could back additional tax-cutting measures after signing a series of executive orders on Saturday.
The White House did not immediately respond to a request for comment.
Suspending the collection of payroll taxes through the end of the year was among them. It defers their payment by workers until 2021 – unless Congress approves waiving them.
While the president can delay many tax payments for up to a year, Congress holds authority to set tax policy under the Constitution. That power includes forgiving tax bills. Any measure aimed at circumventing the legislative branch could trigger court challenges and criticism from Democrats and Republicans.
Congress is deadlocked on further economic relief with the presidential election drawing nearer. Trump said at a White House press briefing yesterday that the administration was considering an array of tax cuts in an effort to revive a sputtering economy.
“We’re looking very seriously at a capital-gains tax cut and also at an income-tax cut for middle-income families,” he told reporters.
The capital-gains tax cut appears to be gaining steam within the administration. It’s a step to reduce the levies that investors owe on profits when they sell assets like stocks. On Wednesday, Treasury Secretary Steven Mnuchin said Trump supported it in a Fox Business interview.
White House National Economic Council Director Larry Kudlow said the administration would push to reduce the capital gains tax-rate to 15% from 20%. He denied an executive order was under consideration.
The benefits of a capital gains tax cut would mostly go to the top 1%, according to estimates by the Penn Wharton Budget Model, with the wealthy households receiving 86% of the benefit.