Trump shoots down retirement limit to pay for GOP tax cuts
WASHINGTON (AP) — President Donald Trump shot down a possible approach for raising revenue to finance tax cuts in politically must-do legislation for the Republicans, promising today the popular 401(k) retirement program will be untouched.
As Republicans hurtle toward producing a bill to overhaul the U.S. tax system, they're scrambling to find new revenue sources to pay for anticipated tax cuts exceeding $1 trillion.
A proposal to eliminate the widely-used federal deduction for state and local taxes has run into heavy opposition from GOP House members from high-tax states, threatening the enactment of tax legislation Republicans deem essential to retaining their majority in next year's elections.
Trump pledged in a tweet there will be "no change" to tax incentives for the 401(k) retirement programs.
The plan crafted by Trump and Republican leaders calls for steep tax cuts for corporations and potentially individuals, a doubling of the standard deduction used by most Americans, shrinking the number of tax brackets from seven to three or four, and the repeal of inheritance taxes on multimillion-dollar estates.
The child tax credit would be increased and the tax system would be simplified; most Americans would be able to file their income taxes on a postcard, according to the plan.
Crucial details of the plan have yet to be worked out, notably what income levels would fit with each tax bracket.
With the possibility of the state and local deduction being at least partly preserved, some Republican lawmakers were considering limiting the amount workers could save in 401(k) retirement accounts.
"It was a trial balloon and it crashed," said Brian Riedl, a senior fellow at the conservative Manhattan Institute. "They're struggling to find legitimate offsets" for tax cuts.