Hawley says working-class Americans should get payroll tax cut
Sen. Josh Hawley (R-Mo.), who could emerge as a key vote on President Trump’s agenda, says working-class Americans should be able to take tax deductions on their payroll taxes, which would save thousands of dollars for families earning less than $80,000 per year.
Hawley, who has already come out against steep cuts to Medicaid, is laying down another marker for lower- and middle-income individuals and families in his home state by arguing that working-class Missourians should also see their taxes cut this year.
“The negotiations over President Donald Trump’s ‘big, beautiful’ budget bill have to date included surprisingly little talk of tax cuts for the people who need them most: America’s working class,” Hawley wrote in an op-ed for The Washington Post.
“Blue-collar workers haven’t gotten a real pay raise in decades. Mortgages are unaffordable. Rent is unaffordable. Groceries are unaffordable,” Hawley wrote. “All of this takes a toll on the spirit as much as the checkbook.”
Hawley says Republicans can start repairing the eroding buying-power of working-class Americans by “giving them the biggest working-class tax cut in our history.”
He says they should make the largest income tax credits — the home mortgage deduction, the child tax credit and the charitable deduction — available to all Americans who pay payroll taxes, which fund Social Security and Medicare.
He noted those popular tax credits, which provide billions of dollars in tax relief per year, are unavailable to millions of Americans who pay little to nothing in income tax but who still pay a significant chunk of their income in payroll taxes.
“Two-thirds of Americans pay more in payroll taxes than they do in income taxes. And most working-class Americans pay little or no income tax at all,” he noted.
“Republicans should fix this now. Make the home mortgage interest deduction, the child tax credit and the charitable deduction available against the payroll tax,” he urged.
That would allow Americans earning a wage and paying payroll taxes to claim these popular tax credits.
He wrote that this would save a local pastor of a small church with six children who makes roughly $80,000 a year more than $6,000 in taxes in one year.
And he said it would provide a $7,500 tax break to a police officer’s family that pays $33,000 a year in day care costs for two girls.
“Every working family could use the money. And they deserve it. They earned it, after all. Republicans should get back to doing what they once did best: cutting taxes for the people who make this nation work,” Hawley wrote.
Hawley’s proposal comes while Republican negotiators are reviewing other proposals to provide more tax relief to Americans who don’t pay much in income taxes, specifically people who earn most of their money from tips and seniors who live on fixed incomes.
During his address to Congress last month, Trump called on lawmakers to exempt tipped-income from taxation and to shield Social Security benefits from taxation.
These two proposals would cost an estimated $200 billion and $1.5 trillion over 10 years.
Meanwhile, fiscal hawks on Capitol Hill are mulling proposals to offset tax relief for lower- and middle-income Americans by raising corporate taxes or taxes on the wealthy.
Two proposals being floated are letting the top marginal income tax rate revert from 37 percent to 39.6 percent or creating a new tax bracket for people who earn more than $1 million annually.
Hawley told The New York times that he would be open to enacting higher taxes for the wealthy if Trump decides he wants to offset the cost of tax cuts for working Americans.
“I think we need to cut taxes for working folks, so if the president wants to offset that, then I’m definitely open to it,” he said. “I would go so far as to argue that’s the core of his base. So we need to do something for those folks.”
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THE HILL