White House Plans Tax Cut, Hopeful of a Republican House Majority

(Bloomberg) -- The White House continues to work on a new tax-cut plan in hope that Republicans will be in control of Congress after the 2020 elections, President Donald Trump's top economic aide Larry Kudlow said.

“I am still running a process of Tax Cuts 2.0,” Kudlow said in an interview on CNBC Wednesday. “We're many months away.”

Kudlow said the plan will be released later in the summer, in time for it to be used by Trump as he campaigns for re-election. Republicans are focusing on an election message that highlights a strong economy and draws comparisons with their Democratic rivals, who are proposing tax increases to pay for expanded government services.

Kudlow said the administration is getting guidance from Representative Kevin Brady, the top Republican on the House Ways and Means Committee who helped pass the 2017 tax cuts, which slashed the corporate tax rate to 21% and cut individual taxes. Kudlow has not been specific about what the latest tax plan could include.

Brady, who would likely be the chairman of the Ways and Means Committee if Republicans are able to re-gain the House majority, has said his top priority is to make the individual and pass-through tax cuts from the 2017 law permanent. Those tax cuts are set to expire in 2026, unless Congress takes action.

The success of Trump's tax plan depends on Republicans regaining control of the House and maintaining a Senate majority. House Republicans would need a net gain of approximately 20 seats, a difficult feat as an unusually high number of GOP lawmakers are retiring and leaving open seats in the 2020 election.

Kudlow said he is also working with the Senate to develop the plans. Michael Zona, a spokesman for Senate Finance Chairman Chuck Grassley, declined to talk about any specific conversations between the Iowa Republican and the White House but said Grassley “looks forward to continuing to work with the White House on tax reform issues this year.”

Trump made a similar promise to cut middle-class taxes before last year's midterm elections as House Republicans struggled to counter the Democratic message that the 2017 overhaul mostly benefited the wealthy. The president's proposal caught Republicans off guard, and nothing advanced as Brady tried to cast it as part of a unified GOP plan to extend the 2017 cuts.

To contact the reporter on this story: Laura Davison in Washington at ldavison4@bloomberg.net

To contact the editors responsible for this story: Joe Sobczyk at jsobczyk@bloomberg.net, Anna Edgerton

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