The Tax Cut That Trump Wants, but Few Others Do, Explained

The biggest champion of the cut outside the White House has been Arthur B. Laffer, the famed supply-side economist whom Mr. Trump honored with the Presidential Medal of Freedom last year. Mr. Laffer touted the cut and its benefits earlier this week in a call with Mr. Trump and congressional Republican leaders who had gathered in the Oval Office.

Mr. Laffer’s acolytes, including conservative activists Stephen Moore and Steve Forbes, have also pushed Mr. Trump to cut payroll taxes. Their argument is that by reducing the cost of employing someone, and increasing the amount of money workers take home, the cut will make both hiring and job-seeking more attractive.

Other economists point out that the shift in incentives from a temporary tax cut would be weak, at best. Employers would still have to factor in the cost of paying the tax starting in January, which is when workers would have to expect their take-home pay would shrink.

More important, cutting payroll taxes won’t do much for laid-off workers who have few prospects at a time when 18 million Americans are unemployed. Economists have warned since March that such a move would not help those workers.

“They were a bad idea then,” Josh Bivens, director of research at the liberal Economic Policy Institute, who first wrote in opposition to Mr. Trump’s payroll tax proposals in the spring, wrote in a direct message on Twitter this week, “but, since then we’ve lost 14 million-plus jobs, and so we now have 14 million fewer people who would benefit now from a payroll tax cut than would’ve back in March.” It is, he said this week, “a bad idea that has aged terribly.”

Business groups also have shown little enthusiasm for the plan. “We can provide more targeted assistance both to employers, to help maintain employment, but also to individuals who are unemployed,” Neil Bradley, the executive vice president and chief policy officer of the U.S. Chamber of Commerce, told reporters last week. “It is not an issue that we heard from businesses or state and local chambers as a priority that would help during this time.”

Mr. Trump had been pushing Republicans to include the tax cut in the bill they will introduce to kick off the next round of negotiations with Democrats. But his own party has balked.

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