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The White House dismissed the idea that the administration is looking to cut payroll taxes as a way to bolster consumer spending, as economic indicators increasingly point to a potential downturn.
More tax cuts for individuals are being discussed, but payroll taxes aren’t under consideration at present, a White House official said Monday.
The Washington Post reported that administration officials were in the early stages of talks about whether a payroll tax cut could be a useful tool to help avert a potential economic slowdown. The administration is still debating whether to push Congress to approve the tax cut, according to that report.
President Donald Trump has been increasingly citing signs that the economy is strong, while also pushing the Federal Reserve to stimulate the economy. He urged the central bank Monday to cut interest rates by a full percentage point, stepping up his assault on Federal Reserve Chairman Jerome Powell, who Trump said has “a horrendous lack of vision.”
“The Fed Rate, over a fairly short period of time, should be reduced by at least 100 basis points, with perhaps some quantitative easing as well” the president said in a tweet Monday. “If that happened, our Economy would be even better, and the World Economy would be greatly and quickly enhanced -- good for everyone!”
The Fed cut rates last month for the first time in a decade and signaled it was open to doing more amid slowing global growth and uncertainty over Trump’s trade war with China. Concern over the outlook has roiled financial markets and sent Treasury yields toward records lows, flashing recession-risk warnings as investors increase bets that the U.S. central bank will ease rates again.
Americans pay a 6.2% payroll tax on their income, which is used to finance social programs, such as Social Security and Medicare. Payroll taxes, which are paid by both employees and employers, are taxed on wages up to $132,900. President Barack Obama temporarily cut payroll taxes to act as a counterweight to the 2009 recession.
--With assistance from Jordan Fabian.
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