WASHINGTON — President Donald Trump on Tuesday confirmed that his administration is examining “various tax reductions,” including a payroll tax cut, but insisted the prospect of such cuts has long been under consideration and are not in response to signs of a potential recession.
“We’re looking at various tax reductions. But I’m looking at that all the time anyway,” Trump told reporters at the White House at the top of a meeting with Romanian President Klaus Iohannis.
White House officials initially denied a report in The Washington Post Monday that indicated Trump’s economic advisers were weighing a payroll tax cut as a means of boosting the economy.
On Tuesday, Trump acknowledged the proposed cuts were being discussed, but said he has “been thinking about payroll taxes for a long time.” The president said fears of a possible recession, after last week when the Dow Jones industrial average tumbled 800 points coupled with the occurrence of an inverted yield curve in the bond market that has previously preceded recessions, was premature and “inappropriate.”
“We're, right now, the No. 1 country anywhere in the world, by far, as an economy," Trump said, adding that “we're very far from a recession.”
The president said he was also exploring the possibility of reducing capital gains taxes levied on investors who sell their assets, but said “we’re not looking to do anything at this moment" when asked when he planned to present any proposed new tax reductions to Congress, which must sign off on the cuts.
In 2011, the Obama administration pushed through a payroll tax cut as the nation recovered from the Great Recession. The initial cut was renewed temporarily the following year.
American workers pay 6.2 percent of their salary into payroll taxes that fund Social Security and Medicare. Obama’s temporary cut, lowered the rate to 4.2 percent.
Economists have said such cuts provide an immediate short-term boost to consumer spending, but in the long term add to the nation’s growing debt.
Trump on Tuesday repeated his long-standing call for the Federal Reserve to lower interest rates, arguing that a rate cut would prevent any slowdown to an American economy, which is experiencing record low unemployment numbers.
“If the Fed would do its job, I think it would have a tremendous spurt of growth,” Trump said.
Also Tuesday, Trump expressed support for adding Russia back to the current G-7 summit of world leaders, after it was kicked out in 2014 over its annexation of Crimea.
Asked if he would welcome the idea of inviting Russian President Vladimir Putin to next year’s G-7 summit that will be held in the United States, Trump said “it’s much more appropriate to have Russia in.”
“It should be the G-8, because a lot of the things we talk about have to do with Russia,” Trump said. “So I could certainly see it being the G-8 again. And if somebody would make that motion, I would certainly be disposed to think about it very favorably.”