What did Donald Trump do today?
He told Republicans to figure out a way to make the burden of his 2017 tax bill a little more bearable for people in blue states—if they were rich enough.During his first term, Trump repeatedly tried and failed to get substantial legislation passed on a number of Republican priorities: repealing the Affordable Care Act, passing an infrastructure bill, or even "building the wall." Some of this was due to self-inflicted wounds, but in a number of cases the Republican majorities in Congress simply refused to go along with what they saw as Trump's most outlandish (and unpopular) ideas.
Perhaps the only significant legislation passed in Trump's whole first term was his 2017 tax cut package. It was intended to, and succeeded in, reducing the share of tax paid by the wealthiest Americans. It contained a number of special provisions that benefited extremely wealthy people whose businesses were structured precisely the way Trump's own businesses were. Because the government was collecting less money, it also caused a spike in the budget deficit, something Trump had promised to eliminate entirely.
By contrast, low- and middle-income Americans saw little or no change in their tax bills—unless they lived in certain states with relatively high state income taxes like New York, New Jersey, or California. Previously, state and local taxes (SALT) were deductible, but under Trump's plan, that deduction was capped at $10,000. That amounted to a de facto tax increase for people in states politically opposed to Trump.
When elected officials from those states—including Republicans—complained about the effect of that local tax hike, Trump blamed them, saying that they should have "put up a fight" because they "could have won."
Today, with making all of those changes permanent a big part of the upcoming legislative agenda, Congressional Republicans from those more prosperous states tried again. This time, Trump simply told them to come up with a "fair number," effectively abandoning the point.
Republicans in attendance, already deeply skeptical about Trump's proposed budget legislation, were quick to take the win, but Trump's abrupt apathy on the subject is notable. Assuming Trump understood what he was saying, it would effectively be an admission that the SALT cap was punitive towards blue states. However—since letting middle- and high-income taxpayers in these states lower their federal tax burden, the government will take in less money—it also suggests that Trump is no longer even going to pretend to try to reduce the budget deficit, which rose every year under Trump's first term.
Walking back campaign promises has been a theme of this weekend: elsewhere, Trump's future immigration czar admitted that actual deportations of undocumented immigrants would be nothing like what Trump had promised, and Trump's patron Elon Musk cut the "cost-cutting" target of his advisory board's recommendations in half. Not long ago, Trump himself tried to backpedal from the central theme of his entire campaign, admitting that it would be "very hard" to reduce inflation beneath its current very low level.
Why does this matter?
- People who voted for Trump based on things he promised to do might have expected him to try to do some of them.
- How much tax you pay isn't supposed to depend on whether or not you're in the President's good graces.