Trump floats raising taxes on the rich to pay for his sweeping tax and spending cuts package
President Donald Trump said he’s open to hiking taxes on wealthy Americans to help pay for Republicans’ sweeping tax and spending cuts package, but the idea remains hotly contested among GOP lawmakers on Capitol Hill.
In a Truth Social post Friday morning, Trump said that he would “graciously accept” even a “TINY” tax increase on the rich, while acknowledging that it could bring political risks for Republicans.
House GOP lawmakers have been struggling to find $US1.5 trillion ($2.3 trillion) in spending cuts to help offset trillions of dollars of tax reductions.
In a Truth Social post Friday morning, Trump said that he would “graciously accept” even a “TINY” tax increase on the rich. (CNN)
“The problem with even a ‘TINY’ tax increase for the RICH, which I and all others would graciously accept in order to help the lower and middle income workers, is that the Radical Left Democrat Lunatics would go around screaming, ‘Read my lips,’ the fabled Quote by George Bush the Elder that is said to have cost him the Election.
“NO, Ross Perot cost him the Election!” Trump wrote.
“In any event, Republicans should probably not do it, but I’m OK if they do!!!” he continued.
Trump also mentioned the possibility of letting tax cuts expire on top earners – targeting individuals who earn at least $US2.5 million ($3.8 million) or couples that make at least $US5 million ($7.7 million) — in a call with House Speaker Mike Johnson on Wednesday, a Republican source familiar with the matter told CNN’s Dana Bash.
The White House has made the suggestion to Congress with the thought that not only would it help achieve much needed offsets, it could also help wipe away Democrats’ argument about tax cuts for the rich, the source familiar said.
Trump also mentioned the possibility of letting tax cuts expire on top earners – targeting individuals who earn at least $US2.5 million. (Bloomberg)
This is not the first time Trump has indicated that he supports raising taxes on the wealthy, even though throughout last year’s presidential campaign, he repeatedly promised to cut their taxes.
The president recently told Time magazine, “I actually love the concept,” when asked about a proposal circulating to raise taxes for those earning more than $US1 million ($1.5 million) a year.
The idea, however, is not being warmly embraced among the House GOP and is far from guaranteed to make it into the president’s final “one big beautiful” bill, which aims to make permanent the sweeping Trump 2017 tax cuts and incorporate the president’s campaign promises to eliminate taxes on tips and certain other income.
Just extending the 2017 individual tax provisions – which expire at the end of this year – could cost more than $US4 trillion ($6.2 trillion).
Republican lawmakers are also fractured on how deeply they’d have to cut spending – including on Medicaid and food stamps – to meet their targets.
Within the House Ways and Means Committee, members have discussed two ideas.
One is to let the tax breaks for the richest Americans expire, returning their top income tax rate to 39.6 per cent – which is what it was before Trump’s 2017 tax overhaul – from the current 37 per cent.
The president recently told Time magazine, “I actually love the concept,” when asked about a proposal circulating to raise taxes for those earning more than $US1 million. (AP Photo/Jacquelyn Martin)
This has drawn some criticism, however, as some Republicans fear it could impact small business owners.
But it could hit roughly 1.5 million households and cut about $US409 billion ($636 billion) of the cost, as well as greatly limit potential economic growth from making the tax cuts permanent, according to the Tax Foundation, a right-leaning think tank.
Another idea is to create a brand-new tax bracket for the wealthy.
The proposal, though limited in scope, could contribute to offsetting costly tax provisions, such as restoring the state and local tax deduction – known as SALT – that has become another flashpoint in Congress’ tax debate.
The new tax bracket would raise about $US59.3 billion ($92 billion) over a decade, according to the Tax Foundation.
And it would affect between 150,000 and 200,000 households and would have a much smaller dampening effect on the package’s economic growth potential.
Despite Trump’s apparent openness to raising taxes on the wealthy, his economic adviser said Friday that the president “is not a strong advocate” of the idea. (Bloomberg)
Levying a higher income tax rate on the very wealthiest of Americans would raise less money because much of that group’s earnings come from dividends and capital gains, which are taxed at lower rates, said Garrett Watson, the foundation’s director of policy analysis.
Also, there are much fewer of them.
One of the considerations for Republicans is what the goal of such a provision would be – to limit how much of the benefit is going to the rich or to raise more money to offset other tax cuts, Watson said.
Despite Trump’s apparent openness to raising taxes on the wealthy, his economic adviser said Friday that the president “is not a strong advocate” of the idea.
Asked whether Trump is seriously considering taxing the rich to pay for his budget bill, National Economic Director Kevin Hassett said: “The president is not a strong advocate of that, but he is a strong advocate of many things like no tax on tips, no tax on overtime, and nice treatment for auto loans.”
“He has cited his priorities, and he understands that in the end, the final bill will include some priorities of members of the House of the Senate.
That’s how the democratic process works, and that’s really what this conversation is about.”
When asked how the White House expects to pay for the bill Hassett argued Congress has already identified clear areas for cuts. (AP)
When asked how the White House expects to pay for the bill, given a number of its stated priorities are expensive, Hassett argued Congress has already identified clear areas for cuts, without detailing what they are and whether they are achievable.
“Well, the budget rules in the House and the Senate are very clearly identified that include spending cuts and so on, and they don’t include dynamic scores,” he told CNN.
“And so in the fullest of time with the spending cuts that we’re achieving ,and the dynamic score of the tax bill, we’re highly confident that we’re going to reduce the deficit that make bond markets celebrate.”
House Ways and Means Chairman Jason Smith is expected to meet with Trump at the White House on Friday, and Hassett earlier told CNBC that he expects Smith will outline the House’s schedule for the tax bill at some point during the day.
Hassett has been meeting almost weekly with Johnson, Treasury Secretary Scott Bessent and others regarding Congress’ budget.
Earlier this week, the group met in the Roosevelt Room of the White House.
