Donald Trump’s proposal to raise taxes on the wealthiest Americans violates Republican orthodoxy, and he hopes he can pay for the broader tax breaks debated by Congress.
The U.S. president proposed that he raised taxes on people who earn more than $2.5 million a year as he began talking to Congressional Republicans about the details of the new fiscal plan he hopes to pass this year.
"The president is considering allowing individuals who earn $2.5 million or more to return from 37% to 39.6% before 2017. This will help pay for large-scale intermediate and working-class tax cuts and protect Medicaid," a person familiar with Trump's thinking said Thursday, involving government health plans for lower-level families.
Trump's proposal will mark a major breakthrough for high-income earners by the traditional Republican low tax law and has drawn criticism from some right-wing groups who say it is more like democratic policy.
This will extend Trump's 2017 tax cuts, which will expire next year as the White House and Republicans on Capitol Hill try to speed up fiscal plans.
Tax bills are Trump's highest economic legislative priority, but the global trade war he launched on April 2 overshadowed him early in his second term, including a series of high tariffs on U.S. trading partners.
Negotiations among Republican lawmakers also reveal differences on how to pay for tax breaks and other measures in the plan.
In addition to considering taxes for the wealthiest families, Trump has also shown that he is willing to end preferential tax treatments for hedge funds and private equity profits, called "carrying interest" to a potential blow to Wall Street.
However, in addition to taxes on financiers and wealthy Americans, lawmakers are considering raising the “salt hat”, a move that would allow real estate owners to deduct $30,000 from their tax bills from state and local taxes.
The current $10,000 limit is set in Trump's 2017 tax plan. In many thriving American communities, the new restrictions will constitute a significant tax break.
"This is still a discussion that is going on between members and I think we'll find the right point," Republican House Speaker Mike Johnson told reporters.
Trump's consideration of the increased tax increase in the wealthiest Americans has aroused rapid opposition from the conservative anti-tax group.
“Rising the maximum tax rate to 39.6% was Kamala Harris’ proposal. She lost the election of President Trump. There is no need to take a tax rate hike,” Americans carried out tax reforms, which opposed all tax increases.