House Republicans might add a new tax bracket for those who earn more than $1 million or more per year to pay for tax cuts for small businesses and middle-class families.
The current income tax rate taxes Americans at a rate of 39.6 percent for those who make $418,000 or more per year. Republicans’ proposed tax rate would cut that income tax bracket to 35 percent.
House Republicans on the Ways and Means Committee continue to flirt with whether they would want to create a new tax bracket between $418,000 and $999,999, and those who make more than $1 million per year will not receive a tax cut.
Keeping the tax rate at 39.6 percent for those who make more than $1 million per year will help lower the deficit that the tax plan will create by cutting taxes on corporations and the middle-class.
Republicans on Ways and Means hope to finish their tax bill during meetings this week on Tuesday and Wednesday.
Keeping tax rates at 39.6 percent for some of the wealthiest Americans could draw the ire of the Republican donor class, as well as Americans for Tax Reform President Grover Norquist. Norquist said, “I understand compromise, but why compromise with the sin of envy? This isn’t the dumbest idea I have ever heard of. But it is in the top 20.”
Norquist also argued that the new millionaire tax bracket will not stymie Democrats’ attacks on the Republican tax plan and will alienate conservatives. One administration official said that Trump does not believe that the millionaire tax bracket will not alienate wealthier Americans.
The official said, “He basically thinks they [rich people] are fine and he believes they don’t care that much about the individual rate so long as they get all the other goodies, like the corporate rate and expensing.”
The House is expected to pass the Senate’s budget proposal this week – a measure that will advance tax reform.
House Republicans have not made any secret of their disdain for Gary Cohn and Treasury Secretary Steven Mnuchin. Republicans called Mnuchin and Cohn “the Democrats.”
Former White House chief strategist and Breitbart News executive chairman Steve Bannon pushed for increased taxes on the wealthy to offset the cost of deep tax cuts for middle and working-class Americans. Bannon reportedly wanted to have the highest tax bracket to “have a 4 in front of it.”
President Donald Trump in the past warmed to the idea of raising taxes on the rich to pay for tax cuts for the middle-class.
In July, Trump told the Wall Street Journal, “The people I care most about are the middle-income people in this country, who have gotten screwed. And if there’s upward revision, it’s going to be on high-income people.”
President Trump added, “I have wealthy friends that say to me, ‘I don’t mind paying more tax,’” he said, before adding that “we have to take care of middle-income people in this country. They built the country. They started this whole beautiful thing that we have. And we have to take care of them. And people have not taken care of them, and we’re going to.”