Trump Pledges Big Tax Cuts That May Do Nothing for the Economy

President Donald Trump is tapping his presidential authority to make tax changes that Congress is refusing to do, but his limited power means he could end up over-promising and under-delivering on his pledge to slash IRS bills.

Trump has deferred hundreds of billions of dollars worth of payroll tax levies and is contemplating another executive action that would amount to a roughly $100 billion capital gains tax cut for investors by changing Treasury Department guidelines.

The president is running for re-election in November trailing Democrat Joe Biden in every recent poll. Meanwhile, Congress is deadlocked on another broad stimulus as the country continues to struggle under a still-raging coronavirus pandemic. There are no immediate prospects for more negotiations and the stalemate could drag into September, leaving the economy limping as voters are getting ready to make their choices.

With a recovery key to Trump winning a second term, actions are aimed at giving a lift to both his working-class base and financial markets. But the tactic comes with a significant amount of political risk.

Those payroll tax payments will still come due unless Congress decides to forgive the amounts, which is no sure bet. Both Republican and Democratic leaders aren’t enthusiastic about slashing the levies that finance Social Security and Medicare.