Trump's inner circle reportedly weighs push for higher taxes on millionaires

Boston Globe

23-04-2025

The concept, however, faces strenuous opposition, including from longtime allies of the president. Outside Trump advisers Newt Gingrich, Steve Moore and Larry Kudlow have come out strongly against it, arguing the plan undermines the president's promise to cut taxes and will discourage economic growth, as has the influential Fox News host Sean Hannity. House Speaker Mike Johnson (R-Louisiana) and GOP Sens. Dave McCormick (Pennsylvania) and Ted Cruz (Texas), among other congressional Republicans, have also made clear that they dislike the idea of raising taxes and do not expect it to become incorporated into new legislation.
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Gingrich posted a note on social media Tuesday that he said came from Trump, indicating that the president would 'love the idea of a small increase' but that it would probably hurt Republicans politically, so 'if you can do without it, you're probably better off' not raising taxes. A White House spokesman did not immediately respond to a request for comment on the note.
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Treasury Secretary Scott Bessent has expressed openness to a range of ideas, including the possibility of raising taxes on Americans earning more than $5 million per year, two of the people said.
The weighing of multiple options reflects the difficult math facing the GOP as Republicans try to extend their 2017 tax law, which could add more than $4 trillion in new tax cuts as the national debt surges. GOP lawmakers have explored significant spending cuts - including to Medicaid, the health insurance program for the poor - but are aware of the political drawbacks of doing so while extending hundreds of billions of dollars in tax cuts for the most affluent Americans that the 2017 law delivered. Those obstacles have encouraged some Trump allies to explore higher taxes on the ultrarich.
Yet that idea remains a steep ask for Republicans who have for decades resisted any measures to increase taxes. While most analysts and aides think it's unlikely to advance, the growing number of Trump officials open to higher taxes on the rich reflects an ideological schism in the Republican Party, as a newer and more populist wing rejects some of the traditional conservative dogma that has dominated the party for decades. Several people cautioned many options are being considered as Trump advisers brainstorm ways to reach an agreement on tax legislation.
Most of the tax cuts approved by Republicans in 2017 are set to expire at the end of this year without congressional action.
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'I don't see it getting through the Senate Finance Committee - there's not a chance,' said Doug Holtz-Eakin, president of the center-right think tank American Action Forum, who added that the idea is unlikely to pass the House, either. 'They'll deflect and say they want to consider all possibilities, but it won't have the votes. … They'll see this as a punitive tax on rich people for no reason. They don't like the politics. They don't like the economics. They're not interested.'
Bannon has pitched various ideas for how Republicans can recoup some revenue by raising taxes on the rich. One proposal would allow the top tax rate to revert to its level before the 2017 tax law, from 37 percent to 39.6 percent. (This would raise taxes for those with more than $626,350 in earnings.) Bannon has also proposed creating a new bracket with higher taxes for those earning $1 million or more, arguing the GOP should act on behalf of its increasingly working-class voting base. Bannon and some other Trump allies have also discussed a third idea to create an even higher top tax bracket, for those earning more than $3 million or $5 million, two of the people said.
'This guts the AOC-Bernie 'oligarchy tour,'' Bannon said, referring to the populist rallies being held by Rep. Alexandria Ocasio-Cortez (D-New York) and Sen. Bernie Sanders (I-Vermont). Bannon has been trying to convince Republicans to embrace higher taxes on the rich since Trump's first term. 'Politically, it's game, set, match - it's a no-brainer. This would destroy the Democrats.'
Critics say that even a higher tax on millionaire income will not do much to address economic inequality. The wealthiest Americans typically benefit from increases in the value of their stock holdings, but Republicans are not currently considering higher taxes on either capital gains or unrealized paper gains.
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Fewer than 0.1 percent of Americans - or roughly 150,000 returns - earned more than $2.6 million in 2020, according to federal data.
'If you want to tax billionaires, you have to go after their wealth. It's quite plausible they raise the top rate because it's not where the money is,' Steve Rosenthal, who was a senior fellow at the Tax Policy Center, a nonpartisan think tank, said of the GOP. 'The money is in the wealth, the retirement savings, the unrealized gains, all of which goes tax-free. So taxing income may not be that big a deal.'
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At a meeting earlier this month with Senate Majority Leader John Thune (R-South Dakota), Trump mused about the potential merits of the idea without committing to it, the people said. Those comments were first reported by Semafor.
Allowing the top tax rate to go back to 39.6 percent would raise roughly $400 billion over the next decade, according to Kyle Pomerleau, senior fellow at the American Enterprise Institute, a center-right think tank.
'On the Hill, they have a ton of requests and they're looking for ways to offset their costs,' Pomerleau said. 'The budget people are trying to make the numbers work and you have the Trump people who seem open to it, but traditional conservatives do not seem to like it whatsoever.'
Republicans may also be interested in pairing a new millionaire tax hike with legislation to increase the cap on how much state and local taxes Americans can deduct off their federal taxes - a cap introduced in 2017 that also affected more affluent households. That idea, however, would likely leave higher-earners worse off in general and will likely be rejected, said Erica York, vice president at the Tax Foundation.
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A spokeswoman for Vought declined to comment. Taylor Van Kirk, a Vance spokeswoman, said in a statement that 'only President Trump determines the administration's policy agenda' and that Vance is 'fully committed to supporting and executing on those priorities.'
The Treasury Department said in a statement: 'Our administration and Congress are considering a wide range of options. Secretary Bessent is laser-focused on executing the President's policy agenda, which includes making his historic Tax Cuts and Jobs Act permanent and no tax on tips, on overtime, and on social security. The Republican Party is unified both in the Cabinet and in Congress in executing President Trump's policies, with record pace and purpose.'
Vance's openness to higher taxes in some circumstances has provoked alarm among some conservatives given his strong position to claim the GOP presidential nomination in 2028. Vance in 2023 said he opposes further cuts to the corporate tax rate, which the president's 2017 tax law lowered from 35 percent to 21 percent. While in the Senate, Vance also explored bipartisan measures to close tax loopholes for large businesses.
Moore, whom Trump selected to be on the Federal Reserve Board during his first administration, pointed to former president George H.W. Bush's embrace of higher tax hikes as a fatal political miscalculation - an article of faith among many conservatives. Moore expressed concern the party could forgetting that failure.
'This is a potential crisis in the party,' said Moore, president of the Committee to Unleash Prosperity. 'It sounds like Bernie Sanders economics.'
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