Donald Trump seeks to increase tax on wealthy Americans

Donald Trump seeks to increase tax on wealthy Americans

President Trump has asked House Speaker Mike Johnson to include a tax hike on rich Americans in the sprawling fiscal package lawmakers are putting together, reviving an idea that many Republicans have opposed.

According to the New York Times, Trump wants to create a new top income bracket for people making more than $2.5 million per year, and to tax income above that level at 39.6 per cent. He brought up this idea during a Wednesday call with Speaker Johnson.

This change would partially reverse part of the 2017 tax law that Trump himself signed. That law cut the top tax rate from 39.6 per cent to 37 per cent. Currently, the top tax bracket starts at $626,350 for individuals. Trump’s new proposal would bring back the 39.6 per cent rate, but only for much higher incomes.

Trump has been suggesting some kind of tax increase on wealthy Americans for several weeks, which has worried many Republicans who generally prefer cutting taxes. Conservative groups have been fighting against the idea, and last month, Trump himself called a “millionaires tax” potentially “very disruptive.”

Republicans face difficult choices in their current budget work. To pay for extending the 2017 tax cuts, which largely benefit higher-income Americans, they’re planning to reduce spending on Medicaid, a health program that serves lower-income people.

Some Republicans are concerned about how this looks politically: cutting benefits for the poor to pay for tax cuts that mainly help the wealthy. One person familiar with Trump’s thinking said the president believes taxing the ultra-wealthy would help protect Medicaid funding.

Republicans are also looking at other tax increases aimed at the wealthy, such as higher taxes on stock buybacks and limiting tax deductions for highly-paid executives. Trump also wants to end a tax break that allows private equity and hedge fund managers to pay lower tax rates on much of their income.

This renewed interest in taxing the wealthy comes just as House Republicans are preparing to release their tax bill draft. They’re already dealing with other complicated issues like Medicaid cuts and state and local tax deductions.

Senator Michael Crapo, the Republican who leads the Finance Committee, expressed hesitation about the proposal:

So right now, I’m not excited about the proposal,” he said in an interview with the conservative commentator Hugh Hewitt. “But I have to say, there are a number of people in both the House and the Senate who are, and if the president weighs in in favour of it, then that’s going to be a big factor that we have to take into consideration as well.”