Trump wants to cut the capital gains tax, which would primarily benefit the richest Americans.
Treasury Secretary Steven Mnuchin said Wednesday that Donald Trump wants to cut the capital gains tax — a move that would primarily benefit the richest Americans — at a time when millions of low- and middle-income Americans are suffering from the coronavirus-fueled economic crisis.
"The president would like to do capital gains tax cuts, and we do need legislation to do what we want on that front," Mnuchin said Wednesday on Fox Business.
A cut to the capital gains tax would mostly impact the wealthiest 1% of Americans, who paid 69% of the capital gains tax in 2018, according to data from the Tax Policy Center.
Research by groups such as the Center on Budget and Policy Priorities has shown that the wealthy already benefit from a capital gains tax that is lower than income tax for average workers. And the rich can often avoid paying tax on their capital gains altogether thanks to other tax loopholes.
It's not the only tax cut for the rich that Trump and Republicans have proposed during the coronavirus economic crisis.
Trump also wants to pass a tax deduction that would allow businesses to deduct meal expenses, known colloquially as the "three-martini lunch" deduction. Republicans say this would help incentivize people to go out to eat at restaurants to help with the economic recovery.
However, economists say that tax deduction wouldn't actually help the economy recover. They say business owners are choosing not to go to restaurants because they present a risk for becoming infected with the coronavirus, not because meals are too expensive without a tax deduction.
This all comes as the Trump administration fights to reduce unemployment insurance payments. Laid-off workers were receiving a $600-per-week boost in their unemployment checks, thanks to the first round of virus relief passed in March. However, that payment expired at the end of July, causing tens of millions of unemployed workers to lose a substantial chunk of income.
House Democrats passed a bill on May 15 that would have extended those $600 weekly payments through the end of the year. However, Senate Republicans refused to vote on the House legislation and wouldn't begin negotiations with Democrats until the unemployment assistance boost was about to expire.
Senate Republicans introduced legislation at the end of July that would slash the unemployment payments to $200 a week, which Democrats have rejected.
Trump, for his part, signed a memorandum ordering the government to utilize federal disaster relief money for $400 weekly unemployment insurance payments to laid-off workers.
However, states would be on the hook to pay $100 of that weekly payment — money many governors say they do not have as they face major budget shortfalls. And many critics have weighed in to say Trump's directive is illegal.
Economists say the added unemployment assistance for workers was one of the most effective forms of coronavirus relief, and that without it there could be millions of more jobs lost.
Published with permission of The American Independent Foundation.