President Donald Trump further complicated Republicans’ quest to find agreement on a package of tax rate cuts and code changes, breaking with his party by tweeting Monday that he wants the 401(k) system left unchanged.
The popular retirement program allows employees to save a slice of their paychecks before taxes are withdrawn; taxes are eventually paid, but not for years until the money is withdrawn, typically after that employee has reached retirement age.
The president essentially came out in opposition to a plan from congressional Republicans to lower the threshold for contributions to retirement plans that qualify for a deferred tax.
As Republican tax-writers toyed with ideas on altering the 401(k) in an attempt to make their still-emerging overhaul bill add up, the president, as he so often has, on Monday morning injected confusion and a new layer of difficulty into something his own party is doing.
The president posted on his favorite medium of communication, Twitter, that there “will be NO change to your 401(k).”
“This has always been a great and popular middle class tax break that works, and it stays!” he told his 41 million followers.
There will be NO change to your 401(k). This has always been a great and popular middle class tax break that works, and it stays!
— Donald J. Trump (@realDonaldTrump) October 23, 2017
The disagreement over the proposal is one of the first public policy discrepancies between the White House and GOP leaders in Congress on the pending tax overhaul.
Republican aides have long worried that Trump’s tendency to post erratically on social media could undermine the tax effort and drive a wedge into negotiations between Congress and the White House.
Monday’s tweet could be the first example of that and is likely to irk some members who were hoping to finalize negotiations in the next few weeks in order to meet an aggressive November timeline for the initiative.
The federal government currently allows individuals to contribute up to $18,000 to a 401(k) plan without paying taxes on it until that money is withdrawn from the retirement account.
Republicans, however, were considering lowering that threshold to as low as $2,400, according to congressional GOP aides. While such a move would have raised immediate revenue for the tax effort, budget experts have decried it as a charade since the money would have to be taxed at some point regardless.
That argument may be moot after Trump’s tweet, however. Sen. Lindsey Graham of South Carolina, a regular Trump golf partner, has warned if the party fails to pass tax cuts, it could be in trouble in the 2018 midterm elections.