The Scoop
President Donald Trump told Republican senators in private last week that he’s open to raising tax rates on some of the highest-earning Americans, according to three people familiar with the meeting.
Trump’s comments came during a sitdown about his agenda with Senate Budget Committee Republicans and Majority Leader John Thune. After Sen. Lindsey Graham, R-S.C., asked Trump how he’d view a proposal to let taxes increase on the highest earners, the president replied that he’d be fine with that idea, the three people told Semafor.
Trump’s remarks were not seen by attendees as full-throated support, but his willingness to entertain higher rates for upper-income taxpayers aligns with recent positive signals about the approach from some White House allies. Letting tax rates rise for higher earners could help inoculate Republicans against Democratic charges that Trump’s agenda breaks his promises to working-class voters who backed him in November.
The White House did not respond to inquiries for this story.
GOP lawmakers are pushing to extend Trump’s 2017 tax cuts law by the end of the year to prevent increases across a wide swath of income ranges while also making good on some of Trump’s newer tax proposals, including an end to taxes on tips and overtime pay. The 2017 law lowered the top tax rate from 39.6 percent to 37 percent; Republicans could decide to extend all of the tax cuts except for the top bracket or even create another bracket for the highest-income earners.
Party leaders are focused on avoiding any tax increases at all, though they’re also not fully ruling out a change in strategy if Trump wants one. Speaker Mike Johnson said on Tuesday that Republicans are “generally … trying to reduce taxes,” and House Majority Leader Steve Scalise, R-La., said Tuesday that the party wants to “keep rates where they are.”
“Republicans are committed to making sure we prevent a $4 trillion tax increase. That’s our focus,” Senate Majority Whip John Barrasso, R-Wyo., told Semafor.
Yet there are already pockets of potential support in the GOP for higher taxes on upper-income earners. House Freedom Caucus Chair Rep. Andy Harris, R-Md., said in a recent interview that he’d be open to the idea, though he spoke for himself and not the conservative bloc he leads.
“If we slightly increase the rate on the highest earners or create a million-dollar earner bracket that’s a little bit higher than the current highest level, I’d be okay with that,” he told Semafor.
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Trump would probably have to put some muscle behind convincing Republicans in Congress to get behind anything construed as an increase in taxes — even on those making hundreds of thousands of dollars a year.
“I believe the White House wants it … now, could you get Republicans in Congress to pass that? I don’t know,” Sen. Josh Hawley, R-Mo., told Semafor.
At the heart of the issue is the politics of the tax bill. Many Republicans are worried they may have to cut Medicaid to pay for some new tax cuts, which would embolden Democrats who are already attacking the bill as a giveaway to the rich at the expense of the poor. Raising taxes on higher earners could blunt those criticisms.
Hawley said a tax increase on high earners “could be” in play moving forward, though he is focused most on increasing the child tax credit as a way to deliver working-class tax relief — an idea that Trump entertained supporting on the campaign trail. The Missourian posited that the revenue from a tax increase on high earners could help finance that child tax credit expansion.
“My colleagues and I go around on this. Their usual line on tax cuts is, ‘We don’t need to offset tax cuts.’ But anytime I bring up the child tax credit, they’re like, ’Well, we need to offset that,” Hawley said. “If the White House wants to offset that with a surcharge on billionaires, that’s fine with me. But I might be in the minority in my party.”
Behind the scenes, Republicans are trying to figure out which new tax breaks to add to an extension of the 2017 tax law. In addition to tips and overtime, Trump also wants to end taxes on Social Security benefits; many Republicans want to extend an expanded child tax credit that is set to expire next year.
Barrasso said that Republicans are continuing to “talk about the advantages of the child tax credit.”
Notably, the last time Democrats controlled Congress and the White House, they sought to increase tax rates on higher earners. Former Sen. Kyrsten Sinema, I-Ariz., opposed the idea, and Democrats ended up creating a corporate minimum tax on large corporations as well as on some large stock buybacks.
Notable
- White House officials are exploring the idea of increased taxes on high earners, Axios first reported.
- Trump ally Steve Bannon told Semafor’s Dave Weigel back in December that “we have to increase taxes on the wealthy.”
Kadia Goba contributed.