A twenty dollar bill.
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Trump eyes ‘very major tax cut’ before Election Day

Donald Trump appeared to make a little news over the weekend, pointing to a “very major tax cut” that he suggested we’d see quite soon – as in, within the nine days.

“We are looking at putting in a very major tax cut for middle-income people. And if we do that it’ll be sometime just prior, I would say, to November… We are studying very deeply right now around the clock a major tax cut for middle-income people – not for business at all, for middle-income people. […]

“Kevin Brady is working on it, Paul Ryan is working, we’re all working on it. We are looking at putting in a major tax cut for middle-income people. We need it.”

Asked about a possible time frame, the president added, “I would say sometime around the first of November, maybe a little before that.” (The first of November is a week from Thursday.)

The fact that he said “we need it” was itself unexpected, given that, according to GOP officials, Republicans have already approved “a major tax cut for middle-income people.” Trump’s rhetoric seemed like an implicit acknowledgement that they have not.

Regardless, the president’s unexpected announcement came as something of a surprise, largely because the midterm elections are two weeks away and members of Congress are in their home districts and states. Lawmakers won’t return to Capitol Hill until after the midterm elections, making it impossible for them to take up legislation on tax policy “around the first of November, maybe a little before that.”

So, what was he talking about? There are three possibilities to consider.

The first is that Trump was simply making stuff up. It’s entirely possible, if not likely, that he was simply sharing an imaginary scenario that he’d made up on the spot, and no one is actually working “around the clock” on a new “very major” tax cut. The lines between fact and fiction are often blurred in this White House, and there’s no reason to accept the president’s claims at face value.

The second is that Trump was being literal when he said officials are working on “putting in” a new tax package by Nov. 1. Perhaps the White House is planning on unveiling some kind of proposal, with the understanding that any meaningful work on the issue would be delayed until after the congressional elections.

Finally, there’s the possibility that Trump is eyeing a major shift in tax policy that wouldn’t require congressional approval. Remember this report from the New York Times in July?

The Trump administration is considering bypassing Congress to grant a $100 billion tax cut mainly to the wealthy, a legally tenuous maneuver that would cut capital gains taxation and fulfill a long-held ambition of many investors and conservatives.

Steven Mnuchin, the Treasury secretary, said in an interview on the sidelines of the Group of 20 summit meeting in Argentina this month that his department was studying whether it could use its regulatory powers to allow Americans to account for inflation in determining capital gains tax liabilities. The Treasury Department could change the definition of “cost” for calculating capital gains, allowing taxpayers to adjust the initial value of an asset, such as a home or a share of stock, for inflation when it sells.

As we discussed at the time, the idea of indexing capital gains taxes to inflation has been around for a while, and it remains a priority for many on the right. Trump administration officials are under the impression that they can make such a change without new legislation, meaning the president might try to approve more tax cuts before the election, even if Congress is effectively out of session.

Of course, if this is what the president has in mind, let’s be very clear about the intended beneficiary of such a move: this would deliver a big tax cut to the wealthy, not the middle class.