Latest news with #HansNichols
Axios
22-05-2025
- Business
- Axios
Middle class? Depends who you ask in Congress
The upper bound of "middle class" in America is often pegged at an annual income of between $150,000 and $250,000, but looking at legislation being drawn up by Republicans in Congress, it seems to be much, much higher. Why it matters: Some of the proposals for the forthcoming budget raise income cutoff levels to as high as $2.5 million per year. Driving the news: The House is considering allowing state and local tax deductions of as much as $40,000 for people making up to $500,000, Axios' Hans Nichols reported this week, a sign that some blue-state Republicans consider $500,000 to be a middle-class income. Between the lines: President Trump considers an annual income of $1 million too modest to justify higher income taxes, per Nichols, but is fine with the idea once household income reaches $2.5 million. The current incarnation of the bill also raises the level at which the estate tax starts being levied from $15 million to $30 million. Where it stands: To be in the top 10% of individual earners, a U.S. worker has to earn $2,905 per week, per the Bureau of Labor Statistics, which is $150,000 per year. To be in the top 10% of households in 2024, you had to earn $235,000. The middle class tops out at $169,800 for a family of three in 2022 dollars, which is $188,400 in 2025 dollars, according to Pew Research Center. How it works: Some government policies only apply to people making less than a certain amount, on the grounds that the rich are already comfortable enough not to need any extra help from Uncle Sam. Looking at where that line gets drawn provides an indicator of where the upper middle class ends and the upper class begins, at least in the eyes of Congress. Flashback: Trump, in his first term, sent out stimulus checks to those making $198,000 per year or less for married households filing jointly. People earning more than that amount were considered rich enough not to need the checks. Conversely, the net investment income tax — a tax on the rich — kicks in only once a married couple filing jointly makes over $250,000 per year. For President Biden, $400,000 was the key number, the level below which he said he would never raise taxes, and above which he wanted a new tax to help pay for Medicare.
Axios
09-05-2025
- Business
- Axios
Trump's "weak tea" tax on the rich
President Trump is half-heartedly floating the idea of raising taxes on rich people, creating a new tax bracket for those individuals earning more than $2.5. million. Why it matters: This isn't as meaningful as it looks — the few high-income people it affects won't likely feel too much pain from the proposal, and other tax cuts under consideration would help offset any increase for them. But it's still surprising and extraordinary that the GOP, which has been cutting income taxes on rich people since the 1980s, is proposing anything like this at all. The big picture: Republicans have been actively working to be seen as a working class party, not the party of the super rich. "This is to pay for working- and middle-class tax cuts that were promised, and protect Medicaid," an administration official told Axios' Hans Nichols. How it works: Under the Trump idea, the tax rate on ordinary income past $2.5 million for an individual, or $5 million for a married couple, would rise 2.6 percentage points. That would create a new top tax bracket of 39.6% — exactly what the top tax bracket was back in 2017, before Congress passed Trump's first tax bill. Yes, but: Back then the top tax bracket covered individuals earning more than $418,400 — this year the top bracket starts at $626,350 for an individual or $751,600 for a married couple. With this new proposal, all income between $626,350 and $2.5 million would still be taxed at 37%, a lower rate than the top tax rate in 2017 before Trump's first tax bill passed. The tax hike would only apply to ordinary income — but the incomes of the rich disproportionately come from capital gains. Those tax rates wouldn't change. By the numbers: The proposal would impact about 0.1% to 0.2% of all taxpayers, estimates chief economist Josh Bivens of the left-leaning Economic Policy Institute, who a few years back floated the idea of levying a 10% surtax on those with incomes above $2 million — a far more painful measure. Those folks bringing home these jumbo paychecks likely include a lot of high-paid doctors, some professional athletes and executives. For the record:"The President has said he himself, personally, would not mind paying a little bit more to help the poor in the middle class and the working class in this country," White House press secretary Karoline Karoline Leavitt said on Friday. But, she added "these negotiations are ongoing on Capitol Hill." The bottom line: The Trump idea would likely raise under $30 billion a year, Bivens estimates. That's $300 billion for ten years — compared to $5 trillion cost of the tax cut extension.
Axios
28-03-2025
- Business
- Axios
Private equity preps a two-part tax fight
Private equity is ramping up for this summer's federal tax fight, and carried interest isn't the only break on the block. Why it matters: The future of Wall Street economics may be decided on K Street. Driving the news: The American Investment Council is launching a 7-figure ad campaign that sounds a lot like PE image rehab, Axios' Hans Nichols reports. Its primary interest is maintaining the status quo on carry, the portion of investment profits kept by fund managers, over the objections of President Trump. Just as it did back in 2017, albeit with a much bigger GOP House majority. Zoom in: The industry also wants limitations on corporate tax deductions for interest to be calculated via EBITDA rather than via EBIT — adding depreciation and amortization to the formula — given how many of private equity's portfolio companies are leveraged. This change was made in 2017, but then it sunset at the end of 2022. AIC has partnered with several other trade groups to ensure that the new tax bill reverts to the base text of 2017, which was supported by Trump, although it could be a heavy lift given all the other new tax breaks that are being proposed (tips, overtime, Social Security, SALT, etc.). State of play, per Axios' Stef Kight: The Senate will vote soon on the updated budget resolution, and then kick it back to the House. Their goal is to get done before they take their two-week recess around Easter. And then the real haggling begins in earnest The recent CBO report saying the debt ceiling must be dealt with by August or September is probably a helpful forcing mechanism.
