We can thank millions of middle-class voters, many struggling to stay afloat, for President Donald Trump’s ascendance to a second reign.
But will he thank them in return?
Not likely, as Trump and House leaders push to renew the president’s first-term tax giveaways to big corporations and America’s gilded class.
Trump could instead lead with Vice President JD Vance’s promise: Boost the Child Tax Credit to $5,000 per child for young families, a progressive idea submitted by Sen. Josh Hawley (R-Mo.) last week in a timid insurgency by Republican moderates who prefer to lift middling Americans.
Yet, Trump and Republican leaders insist on extending tax breaks passed in 2017. Trump slashed income taxes by $60,000 for the top 1% of households, while shaving levies by just $500, on average, for taxpayers in the lowest three-fifths of the nation’s income curve, says the nonpartisan Brookings Institution.
He dramatically sliced the corporate tax rate from 35% to 21%, then eliminated taxes on large chunks of foreign profits enjoyed by multinational firms. Trump’s tariffs on Chinese imports to the United States will tax middling families, as prices rise for appliances, cell phones and even toys.
But Trump now finds himself in a fiscal box of his own making.
These regressive tax breaks will expire unless renewed this year. His wealthy-weighted relief — with no additional tax cuts — would balloon the federal deficit by another $3.3 trillion in the coming decade, the Congressional Budget Office reported last spring. This huge revenue loss must be offset by slashing federal spending in equal measure under congressional rules.
To be fair, some Democrats and moderate Republicans ignore the vitality of middle-class families as well, mostly House members clinging to their seats with slim electoral majorities. These centrists want to scrap the lid on deducting state and local taxes from one’s federal 1040. Trump placed a $10,000 limit on this so-called SALT deduction, limiting tax cuts for wealthy filers who reside mostly in blue states.
Liberalizing this cap, allowing larger deductions as urged by Republicans, would further stuff the pockets of affluent taxpayers. If Congress doubles the SALT cap to $20,000, fully 94% of tax benefits would flow to households earning more than $200,000 per year. Overall, Trump’s economic plan would leave middle-class families even farther behind. Is this what grassroots MAGA enthusiasts had in mind?
Which brings us back to the Vance-Hawley pitch for a caring child credit — tax relief that delivers for middling parents. “I’d love to see a child tax credit that’s $5,000 per child,” the vice president urged during the campaign. The vice president’s proposal would outdo Joe Biden’s short-lived version, which refunded nearly $100 billion to low- and middle-income families in dollops of at least $3,000 for each child under 18 years of age.
A study out this month from my research team details the widespread embrace of Biden’s earlier credit among true working families. Fully 80% of eligible parents earning about $75,000 filed for the Biden credit, which helped families cover rent or child care bills, or new shoes for their kids.
One mother told us how the child credit “helped me cover bills and house payments, and oh my god, the cost of food and gas.” Another reported how refundable tax savings offset “electric bills, and we have birthdays close together, we [now] host kids’ birthday parties for the first time.”
Trump himself doubled the child credit to $2,000, part of his 2017 reforms, the version that has returned after the demise of Biden’s credit. Trump’s rendition remains non-refundable when the credit’s dollar value exceeds a family’s tax bill. So, half of Trump’s credit flows to parents in the upper two-fifths of the income distribution, compared with just 7% going to the poorest fifth. Sen. Hawley would require parents to work outside the home, claiming the child credit discourages paid employment when it’s refundable. But less than 1% of parents filing for the credit report zero earnings, according to the IRS.
Faith in Trump’s policies among blue-collar and middle-class voters continues to mystify many political analysts. Equally perplexing, the president’s tax plan ignores the well-being of these same families and their children.
Bruce Fuller (bruce.c.fuller@gmail.com), professor emeritus of education and public policy at the University of California, Berkeley, began his teaching career at the University of Maryland, Baltimore County, in 1983.