Why the Middle Class Should Love Trump’s Budget Proposal This Week

This is a syndicated repost courtesy of Money Morning. To view original, click here. Reposted with permission.

President Donald Trump’s budget proposal – due sometime this week – will spare cuts to big social welfare programs like Social Security and Medicare.

That’s according to Treasury Secretary Steven Mnuchin yesterday…

Mnuchin told FOX Business on Sunday morning that the new White House administration will not touch entitlement programs for now and that people should not “expect to see that as part” of Trump’s financial plans moving forward.

Mnuchin’s comment fell squarely in line with promises Trump made on the campaign trail about not cutting into Social Security or Medicare for seniors and not nixing Medicaid healthcare for the poor.

Donald Trump on Social Security: “Save it!” June 17, 2015, Dr. Gina Louden.

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“We are very focused on other aspects and that’s what’s very important to us. And that’s the president’s priority,” Mnuchin added.

Then Mnuchin brought up another key campaign promise regarding Trump’s future budget plans set to appeal to middle-class America…

Trump’s Budget Proposal to Include “Major” Middle-Class Tax Breaks

Mnuchin told FOX that Trump will preview sweeping plans that will give the middle class a tax break in a major policy speech to Congress tomorrow night (Feb. 28).

The POTUS claimed multiple times during his campaign that preservation of entitlement programs, coupled with middle-class tax breaks, would aid both America’s vast population of retirees as well as its overburdened working class.

“We’ll cut taxes for the middle class, negotiate new trade deals, bring back jobs, save Social Security and Medicare without cuts, end illegal immigration, build the wall, strengthen our military, knock out ISIS, and take care of our great veterans,” Trump promised on April 23, 2016, as quoted by The New York Times. And just this morning the new president appeared on FOX, where he touted his soon-to-be revealed tax plan and budget proposal. He promised that tax cuts for the middle class would be “major” and that Social Security and Medicare won’t be touched. But he didn’t expand further on proposal specifics.

Here’s what we do know…

A proposal released by Trump’s campaign on Sept. 15, 2016, suggests the tax system will be majorly simplified under the new administration.

Currently, the U.S. individual tax code consists of seven income brackets, pictured below…

Current Tax Plan – Single Tax % Current Tax Plan – Married Filing Jointly Tax %
$0 – $9,275 10% $0 – $18,550 10%
$9,275 – $37,650 15% $18,550 – $75,300 15%
$37,650 – $91,150 25% $75,300 – $151,900 25%
$91,150 – $190,150 28% $151,900 – $231,450 28%
$190,150 – $413,350 33% $231,450 – $413,350 33%
$413,350- $415,500 35% $413,350 – $466,950 35%
$415,050+ 40% $466,950+ 40%

According to the White House’s most recent tax proposal, again from last September, Trump’s new tax plan for individuals cuts those seven brackets down to just three…

Trump Tax Plan – Single Tax % Trump Tax Plan – Married Filing Jointly Tax %
$0 – $37,500 12% $0 – $75,000 12%
$37,500 – $112,500 25% $75,000 – $225,000 25%
$112,500+ 33% $225,000+ 33%

Americans will have to wait until tomorrow evening — when Trump addresses the joint congressional conference — for a more articulated view on his budget and tax plans.

But we expect the new POTUS will start right away to make good on his word about maintaining entitlement programs while giving middle-class Americans a tax break. After all, the GOP party is currently at a strong advantage: Both chambers of the U.S. Congress are in Republican hands. This means major policy changes (say, about middle-class tax breaks and entitlement programs, for example) proposed by the GOP party won’t have to travel through the kind of legislative gauntlet a Dem majority would instate.

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