Supply-Siders Pitch Trump on a Flat Tax

Supply-Siders Pitch Trump on a Flat Tax

AP Photo/Lai Seng Sin

A group of conservative advisers long associated with Republican economic policies are reportedly encouraging former President Donald Trump to embrace the idea of a flat income tax.

Bloomberg’s Stephanie Lai, Amanda Gordon and Enda Curran report that a group including Steve Forbes, Larry Kudlow, Stephen Moore and Arthur Laffer is lobbying Trump on a proposal to institute a federal tax rate of 17% on all incomes, should he regain the White House in the fall. Forbes, who embraced a flat tax when he ran for the Republican presidential nomination in 1996 and 2000, said Monday that the proposal would include significant exemptions, with a family of four shielding their first $54,000 from the tax.

Trump has not spoken publicly about the flat tax, which, as Bloomberg notes, would generally benefit the rich, who otherwise face rising tax rates as their incomes increase. But the leading Republican candidate has promised more tax cuts on the campaign trail, though without providing any details.

No SALT relief: The same advisers have also reportedly lobbied Trump to oppose lifting the current cap on the state and local tax (SALT) deduction, which was imposed by the Republicans’ 2017 tax law to provide additional revenues to partially offset the steep losses created by that legislation. Removing that limit has become an important goal for lawmakers on both sides of the aisle from high-tax states on the coasts.

Laffer, the author of the famous Curve that bears his name and that helped clear the way for the tax cuts of the Reagan era, explained his position on the issue to Bloomberg. “It makes no sense to subsidize New York state’s high tax rates,” he said. “I’m against any type of state and local deductions on the federal level.”

Moore, who advised Trump on tax policy in 2016, agreed. “That benefits just very, very rich people in very blue states,” he said. “I would even get rid of the up to $10,000,” he added, referring to the current cap on the deduction.

Why it matters: Many of the tax cuts for individuals that were part of the 2017 tax law expire in 2025, and should Trump return to office, the long-held conservative dream of a flat tax could be in play as lawmakers hammer out the nation’s fiscal policies next year.