Republicans mull higher taxes on wealthiest Americans to pay for other cuts

Republicans are discussing whether to raise the top individual tax rate or create a new bracket for millionaires and billionaires to help pay for other priorities in their sweeping tax and spending bill.

Increasing taxes on top earners is not widely supported among Republicans who prefer to keep taxes low for all as a way to juice investment into the economy.

But the proposal to raise taxes on top earners is on the table as both a revenue raiser for other priorities and a way to blunt political attacks that the GOP bill is designed to help the wealthiest Americans.

“It’s one of many, many ideas that are in the swirl right now,” Senate Majority Leader John Thune, South Dakota Republican, said. “We’ll have those conversations, but obviously, we want to make sure that we get the current rates extended. And we’ll see where it goes.”

The current individual tax rates, spread across seven different income brackets, range from 10% to 37%. If Congress fails to extend the 2017 Tax Cuts and Jobs Act, most of the tax rates will rise.

Republicans want to lock in the 2017 tax rates and several are reticent to consider any increases, even on the highest earners.

“I don’t really want to be the party of class warfare,” Wisconsin Sen. Ron Johnson, a Republican tax writer, told The Washington Times. “I’m not into raising taxes on anybody.”

Sen. Todd Young, an Indiana Republican who also sits on the tax-writing Finance Committee, said he prefers to keep taxes as low as possible but that tax writers haven’t made any decisions about rates.

“We’re going to make every effort to keep taxes as low as we can, but that needs to be done within a context of trying to stabilize our debt as a proportion of the economy,” he said. “And so we are working through that.”

At least a handful of Republicans have expressed openness to raising taxes on the highest earners.  

Rep. Andy Harris, Maryland Republican and chair of the hardline House Freedom Caucus, told constituents on a telephone town hall Monday that he is open to creating an eighth tax bracket for millionaires and billionaires with a higher rate of 39% or 40% to offset a tax exemption for tips.

Axios first reported last month that the Trump administration was considering allowing the richest Americans’ tax rates to rise to provide room to cut taxes on tips, as well as help blunt Democrats’ attacks about Republicans’ plans to cut taxes for the wealthy.

And Semafor reported that during a meeting with Senate Republicans last week, Mr. Trump said he’d be fine letting taxes rise on top earners.

The Washington Times reached out to the White House for comment.

If Republicans do want to raise taxes on the wealthy, they wouldn’t necessarily have to craft a new tax increase, as Mr. Harris floated with the millionaires bracket. 

They could simply let the current top rate of 37% sunset at the end of the year as scheduled. However, the bump back to a top 39.6% rate would hit a wider swath of earners under that scenario.

The current 37% top rate applies to single filers earning $642,950 or more and joint filers earning above $771,550, but if the 2017 law expires, those thresholds are set to drop to $546,750 and $615,100, respectively.

House leaders have not ruled out an increase for top earners but are sending strong signals they prefer not to go that route. 

House Speaker Mike Johnson declined to comment about the specific idea on Tuesday, saying he did not want to put his thumb on the scale when hundreds of tax proposals are being discussed. 

“Generally, we’re trying to reduce taxes around here,” the Louisiana Republican said. “That’s a general principle. But we’ll have to see.”

House Ways and Means Chairman Jason Smith, Missouri Republican, expressed a similar sentiment. 

“We’re about lower rates,” he told The Times, but said tax writers are looking at every provision of the tax code.