WASHINGTON: U.S. President Donald Trump privately urged House Speaker Mike Johnson during a phone call on Wednesday to raise the tax rate on the wealthiest Americans and close the carried interest loophole for Wall Street investors, two people familiar with the conversation said on Thursday. Trump and Johnson spoke as the Republican-controlled House of Representatives struggles to agree on a path forward on extending the 2017 Tax Cuts and Jobs Act for businesses and individuals, while eliminating taxes on tip income, overtime pay and Social Security benefits, without adding too much to the nation's $36 trillion debt.
Republicans are aiming to complete Trump's “one big beautiful bill” by late next week and pass it in the House ahead of the May 26 U.S. Memorial Day holiday.
Trump is pushing to raise the top tax rate from 37% to 39.6% for individuals earning $2.5 million and higher or joint filers earning $5 million, with carve-outs for small businesses, according to one source. “This will help pay for massive middle and working-class tax cuts, and protect Medicaid,“ a separate source said.
Republicans have been under pressure from the Trump's populist MAGA base to raise taxes on the wealthy. But Johnson and other top Republicans have resisted an increase in the top tax rate, and Treasury Secretary Scott Bessent told reporters last week that Trump had ruled out the idea.
The current legislative plan calls for offsetting tax cuts by reducing spending on the Medicaid healthcare program for lower-income Americans and nutrition support programs and by eliminating popular environmental tax credits, changes opposed by Republican centrists.
“The spending reduction side of this equation has been the most challenging, which is a sad commentary on my party and my conference. But it’s the reality,“ House Budget Committee Chairman Jodey Arrington told reporters. Arrington and other House Republicans said failure to achieve $2 trillion in spending cuts over a decade would jeopardize Trump's hopes of making his 2017 tax cuts permanent. A higher tax rate on the wealthy could provide added revenues to compensate for cuts elsewhere. Representative Jason Smith, who chairs the tax-writing House Ways & Means Committee, said in a recent interview that his panel could close tax loopholes that benefit the rich in the upcoming bill.
