After President Donald Trump walked back his promise to protect 401(K) tax deductions, former Secretary of Labor Robert Reich explained why “one way or another, the middle class is getting shafted” by Republican proposals for tax reform
“This has always been a great and popular middle class tax break that works, and it stays!” President Trump promised, via Twitter.
“Except for it might not, because according to him today, it’s on the table,” CNN anchor Erin Burnett noted.
Burnett asked Reich how big of a hit the middle class would suffer.
“Erin, it would be a huge hit, 55 million Americans depend on 401(k) plans for their savings,” Reich noted. “It’s important to understand that it used to be that people had pensions … and then we moved to something called defined contribution pensions. Now most people depend on 401(k)s, tax deferred 401(k)s.”
“This is the savings vehicle of the middle class and for Donald Trump and for the Republicans to sort of be sort of so careless about this … is so disrespectful to the millions of Americans who depend on this,” Reich explained.
Burnett noted Trump “repeatedly promised this tax plan is to help the middle class” yet would reduce this key middle class tax break by 90 percent. A former Trump campaign official defended the White House.
“I guarantee you that those breaks are not going to be reduced by 90%. Might they be trimmed a little bit? Possibly,” senior economic advisor to the Trump campaign Stephen Moore predicted. “On balance, the middle class is going to get a big tax break.”
Burnett asked Reich if those claims added up.
“That’s just simply not true,” Reich responded, suggesting that every scenario would squeeze the working class.
“One way or another, the middle class is being shafted by this,” Reich concluded.
Moore, the Trump campaign economic advisor, suggested a compromise of only removing deductions for those making over $500,000 a year.
“Steve just a second, if you want to do that, what about having another tax bracket for people at the very top. What about raising their taxes?” Reich asked.
“No!” Moore shouted while waving his arms frantically. “That’s where I get off the plane.”
Watch Prof. Robert Reich explain why he predicts the middle class will be inevitably squeezed if Republican tax reform passes: