Trump’s New Tax Cut Proposal Is $75Bn More Costly Than The Federal Pay Increase

U.S. Air Force photo by Tech. Sgt. Daylena S. Ricks/Public Domain

President Trump wants to deny raises to federal employees to save $25bn while giving tax cuts that will cost $102bn.

President Donald Trump wants to save the federal government $25 billion by denying raises to federal employees next year, but at the same time, Trump is considering another tax break that would cost $102 billion over the next decade.

In letters to House and Senate leadership Thursday, the president said “We must maintain efforts to put our Nation on a fiscally sustainable course. I view the increases that would otherwise take effect as inappropriate.”

“In light of our Nation’s fiscal situation, Federal employee pay must be performance-based, and aligned strategically toward recruiting, retaining, and rewarding high-performing Federal employees and those with critical skill sets,” the president wrote.

Ohio Rep. Mike Turner countered Trump’s argument in letters of his own, telling Senate Majority Leader Mitch McConnell and House Speaker Paul Ryan that “We must work together to balance the budget but not on the backs of federal civilian employees.”

“The President says we cannot afford this pay raise,” Turner wrote in his letter to Ryan and McConnell. “However, it is my firm belief that our country cannot afford to make the federal government a less attractive place to work and risk losing these often-undervalued employees to the often higher-paying private sector,”

Turner’s opponent, Democrat Theresa Gasper, expressed similar sentiments, noting that Trump and his Republican cohort are willing to bestow tax cuts on the rich but steal away opportunity from the federal government’s own employees.

“President Trump and Republicans in Congress push for tax cuts for the ultra-wealthy and corporations that would ship jobs overseas but renege on their promises to public service workers, citing cost concerns,” Gasper said in a statement.

Gasper is correct: Trump not only signed massive tax cuts for corporations and wealthy Americans last year but is actively considering another move that would see billions of dollars in tax savings distributed to the very rich.

In an interview with Bloomberg, Trump said he was considering indexing capital gains taxes to inflation, a legally dubious move that would result in a $102 billion tax cut over the next 10 years.
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According to the Penn-Wharton Budget Model, over 97% of the benefits from such a tweak would go to the top 10% of income earners in the US, 86% of the benefit would go to the top 1% of income earners, and 63% of the benefit would go to those in the top 0.1%.

Meanwhile, the American Federation of Government Employees — the largest union representing government workers — rejected Trump’s plan to scrap pay increases for a group of workers who need them far more than the wealthy need another tax cut.

“President Trump’s plan to freeze wages for these patriotic workers next year ignores the fact that they are worse off today financially than they were at the start of the decade,”AFGE National President J. David Cox Sr. said in a statement.

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