President Trump’s last-minute pitch to raise taxes on the highest-income Americans could be rewriting the conventional Republican political wisdom on the issue.
The president has sent mixed messages publicly about where he stands on the policy, and whether he thinks it’s good politics — both recognizing the political perils of reneging on a promise to keep tax rates lower, while seeing the upside in neutralizing Democratic arguments and finding more revenue.
The millionaire tax hike suggestion came as House Republicans are rushing to iron out the thorniest portions of President Trump’s legislative agenda together before meeting to advance the bills next week.
The House Ways and Means Committee released partial text of the tax portion of the bill on Friday that did not include a new tax bracket for millionaires. The committee is expected to make additions and changes to that text, though, and could potentially add it in by the end of a meeting scheduled for Tuesday afternoon.
But even if Republicans fully abandon the idea of taxing the rich more in this legislation, the back and forth has broken open arguments that have typically been off limits to Republicans could affect policymaking going forward.
Republicans had previously floated — and then ruled out — the idea of making high income earners pay more. The idea, however, bubbled up again from the White House this week as tax-writers met to try to nail down the tax legislation’s details.
A source familiar with the president’s thinking told The Hill on Thursday that Trump was “considering allowing the rate on individuals making $2.5 million or more to revert from 37% to the pre-2017 39.6%,” arguing it would “help pay for massive middle and working-class tax cuts, and protect Medicaid.”
That spurred a wave of opposition from tax-cut crusaders and resistance from some GOP lawmakers, many of whom argued it could harm small businesses owners.
Americans for Tax Reform President Grover Norquist, who has long worked to have politicians sign pledges to not raise taxes, said that Trump called him to ask his opinion about the matter on Wednesday.
“I told him I thought that it was a job killer, that it was bad for the economy, that it was political death,” Norquist said, reminding him of the many times he promised to make the 2017 tax cuts permanent. And suggestions from staff to the contrary, Norquist said, would not serve him politically.
“That’s what Darman did to Bush,” Norquist said, referencing the Office of Management and Budget director for former President George H.W. Bush — who lost reelection after making the promise, “Read my lips: no new taxes,” before agreeing to tax increases.
“That’s kind of a disgusting thing for a staffer to do to a president, is to tell him to go out and change his mind and say, ‘Oh, I lied when I ran for office,’” Norquist added.
Trump referenced the infamous Bush quote in a Truth Social post on Friday when he said Republicans should “probably not” raise on those pulling multi-million-dollar incomes, musing that Democrats could use it against Republicans.
But Trump also said it was not that broken promise that lost Bush in 1992: “NO, Ross Perot cost him the Election!” Trump said, referencing the independent presidential candidate who pulled nearly 19 percent of the popular vote.
The tax hike idea, however, garnered interest from other fiscal hawks eyeing ways to keep the overall costs of the massive legislation down.
Rep. Chip Roy (R-Texas) — one of the biggest fiscal hawks in the House — saw the prospect of higher taxes for the wealthiest as a good way to even out the legislation’s balance sheet.
“I think it’s wise of him to be putting that on the table,” Roy said of the proposal. “And I think a lot of people on my side of the aisle reflexively throw up on these kinds of things when we got to put a package together, right? And that means moving some things around.”
House Republicans have approved a framework that allows for $4 trillion to $4.5 trillion in tax cuts — including extending tax cuts that Trump signed into law in 2017 — if they can find $2 trillion in spending reductions elsewhere.
Trump has also called for ending taxes on tips and overtime, while other Republicans are seeking to increase the state and local tax (SALT) deduction cap — all expensive propositions, and the impacts of which could potentially be lessened with a tax hike for the rich.
And with Republicans drafting a number of reforms to Medicaid and other assistance programs that result in billions in savings, they are wary of the talking point from Democrats that Republicans are cutting entitlements for the poor to pay for tax cuts for the rich.
Trump on Friday afternoon pointed to those political optics as an argument in favor of the tax hike.
“I actually think it’s good politics to do it, where richer people give up — and it’s a very small, it’s like a point — but they give it up to benefit people that are lower income,” Trump said, according to a pool report.
Norquist, for his part, said he feels confident that Republicans will not raise taxes based on his public comments — and that Trump and GOP leadership have agreed to take the millionaire tax off the table.
“He’s not saying, ‘Please vote for this,’ You know? He’s saying, ‘Probably not a good idea, it did cost Bush the presidency,’” Norquist said.
Republican leadership is not publicly completely ruling out the prospect yet, even as they express disapproval of increasing taxes.
“Well, I don’t want to see taxes go up on anybody,” Senate Majority Leader John Thune (R-S.D.) said on CNBC Friday morning in response to the news about Trump pushing for a higher rate. “I mean, we’re all about lowering taxes, we’re not about raising taxes.”
“But I do think the president – he’s not a conventional president. The people didn’t vote for a conventional president,” Thune said. He added that the House lawmakers are going to have to make all of the president’s policies fit within the they’ve set.
The Senate Leader also hinted that Republicans were looking at multiple different ways to increase that tax burden on the rich — like a threshold of an increase for those making $5 million individually or $10 million as a couple, rather than the $2.5 trillion and $5 trillion figures.
Norquist said that Republican leadership declining to publicly rule out the tax hike idea was keeping with their stance of declining to confirm any details of the tax legislation.
“I’m not losing any sleep over the idea that this is something other than that,” Norquist said.
National Economic Council Director Kevin Hassett added to the intrigue about Trump’s thinking on the matter. “He’s not thrilled,” Hassett said of Trump’s thoughts on the increase on CNBC Friday morning.
“He understands the argument. It’s one of the things the Senate and the House has to work out. … It’s not high on the president’s priority list,” Hassett said.
Trump, though, said Friday afternoon that he “would love to do it” — but as for Republicans in Congress? “I don’t think they’re going to do it,” the president said.
Mychael Schnell contributed.
