- Republicans are actively debating whether to increase taxes on the highest earners to pay for proposals like no taxes on tips. They are looking for ways to offset a projected decrease in revenue that would occur if they extend the 2017 Trump tax cuts.
- The 2017 Tax Cuts and Jobs Act lowered the highest tax rate from 39.6% to 37%. Unless Congress approves an extension, it will go back up at the end of the year.
- President Trump said he’s open to the idea but congressional Republicans have mixed feelings.
Full Story
The wealthiest Americans could see their taxes increase at the end of the year if Republicans move forward with a proposal they are actively debating. They are looking for ways to offset a projected decrease in revenue that would occur if they extend the Trump tax cuts.
How high would taxes go?
The Tax Cuts and Jobs Act of 2017 (TCJA), which lowered the rate for most taxpayers, is set to expire at the end of 2025. The highest rate decreased from 39.6% to 37%, and the income threshold for that bracket increased from $546,750 to $642,950. The legislation was President Donald Trump’s signature economic policy victory during his first term, and Republicans want to make it permanent.
Download the SAN app today to stay up-to-date with Unbiased. Straight Facts™.
Point phone camera here
Extending the TCJA is expected to reduce federal revenue by $4.5 trillion over the next ten years, according to the Tax Foundation. That’s a tough reality for a party that campaigns on responsible spending and deficit reduction.
Republicans are also trying to expand the TCJA by eliminating taxes on tips, overtime and Social Security benefits. That would reduce revenue even further.
Raising taxes on the wealthy would make up some of that lost revenue and directly counter a key Democratic point — that Republicans want to pass the tax bill to help corporations and billionaire donors.
Is there enough support?
The proposal has mixed reviews among the GOP. President Trump recently told Senate Republicans he’s open to the idea, but leadership in the House of Representatives is opposed.
“We’re the Republican Party, and we’re for tax reduction for everyone. So, I mean, that’s a general principle that we always try to abide by,” Speaker Mike Johnson, R-La., said in an interview on Fox News.
Majority Leader Steve Scalise, R-La., told Fox Business he does not support the initiative.
Senate Majority Leader John Thune, R-S.D., said he still isn’t sure what the party will decide but confirmed discussions are taking place between Congress and the White House.
“There’s a lot of stuff, a lot of proposals, flying around in the tax space. And in the end, we’ll have to find consensus, but the important thing is making sure that taxes don’t go up on the American people,” Thune told NBC News.
Treasury Secretary Scott Bessent said in an interview with Bloomberg that “everything is on the table.” The outlet reported earlier this month that Republicans are also considering adding a new tax bracket for those making $1 million or more.
