Trump Floats Tax Hike for Millionaires

President Donald Trump asked House leadership to consider an increase in the top tax rate for those making millions of dollars a year, a proposition some Republicans are wary of as they look to reach significant slashes in spending to pay for an extension of the tax cuts.

A source familiar with the president’s thinking told the Washington Examiner that Trump is considering allowing the rate on those making $2.5 million or more to revert from 37% to the pre-2017 39.6%.

“This will help pay for massive middle and working-class tax cuts and protect Medicaid,” the source stated.

This is a change from two weeks ago when Trump said on April 24 he thought raising taxes on the wealthy would be “disruptive because a lot of the millionaires would leave the country.”

The president reportedly pushed Speaker Mike Johnson (R-LA) on this proposal during a phone call on Wednesday, adding another policy to Johnson’s plate as his conference argues over how best to reform Medicaid without cutting benefits for people.

Extending the 2017 Tax Cuts and Jobs Act is one of many aspects of the GOP’s “one big beautiful” megabill that is being workshopped in various committees. Through a process called reconciliation, Republicans can bypass the 60-vote filibuster in the Senate and utilize the GOP trifecta to codify Trump’s agenda much more easily.

But fiscal hawks and centrist Republicans are battling each other over how best to craft the budget megabill, as fiscal hawks want to see at least $1.5 trillion in spending cuts, and centrist GOP lawmakers want to ensure Medicaid and SNAP benefits are not overhauled dramatically to pay for extending the expiring tax cuts.

Sources told the Washington Examiner that Trump was receptive to hiking up the tax rate for individuals back to nearly 40% during a meeting with Republicans on the Senate Budget Committee last month.

Johnson has poured cold water on that suggestion before, telling Fox News’s Sunday Morning Futures in mid-April that he’s “not a big fan of doing that.”
“We’re the Republican Party, and we’re for tax reduction for everyone,” he said at the time. “So, I mean, that’s a general principle that we always try to abide by.”

Senate Finance Committee Chairman Mike Crapo (R-ID) said on Hugh Hewitt’s radio show on Thursday that raising taxes on the wealthy is not good for growth.
“I personally think, you know, I’m focused on the Senate bill on pro-growth tax policies and permanence, particularly for the TCJA, and increasing those taxes does not fit that standard, in my opinion,” Crapo said. “So right now, I’m not excited about the proposal.”

But, Crapo said, if Trump weighs in in favor of hiking the top tax rate, “that’s going to be a big factor that we have to take into consideration as well.”

Finding a path forward to extend the tax cuts has proven to be a difficult task in recent weeks.

House leaders originally said the 11 committees in charge of a portion of the megabill would markup last week and this week, with next week intended to be a work week for the House Budget Committee to piece the megabill together.

But some of those hearings were delayed after Johnson, Ways and Means Chairman Jason Smith (R-MO), Energy and Commerce Chairman Brett Guthrie (R-KY), and Majority Leader Steve Scalise (R-LA) met at the White House. Now the Ways and Means, Agriculture, and Energy and Commerce committees will mark up their section of the reconciliation bill next Tuesday.