President Trump’s half-hearted push to raise taxes on rich people isn’t as big as it looks, even if it’s extraordinary to see a Republican suggest anything like it at all.
Why it matters: The proposed new tax rate would affect about 0.1% to 0.2% of all taxpayers and raise $300 billion in revenue over 10 years, estimates chief economist Josh Bivens of the left-leaning Economic Policy Institute.
- “This proposal is better than nothing, but it’s really weak tea,” Bivens told Axios.
- Bivens’ estimate may be generous: The Tax Policy Center at Brookings estimates the new bracket would raise $8.2 billion in 2025.
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.
- Those cuts include eliminating taxes on tips, overtime andSocial Security payments.
What they’re saying: “Well, I don’t want to see taxes go up on anybody,” Senate GOP leader John Thune told CNBC’s “Squawk Box” today.
- But Thune added: “I think the people around him understand what he’s trying to achieve here — and that is, if you look at what he’s proposing, there’s particular emphasis on working Americans.”
- White House press secretary Karoline Leavitt said today: “The president has said he himself, personally, would not mind paying a little bit more to help the poor and the middle class and the working class in this country.”
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.
- 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.
— Emily Peck