White House economic adviser Kevin Hassett said the president will likely announce in the coming days whether he thinks the top marginal tax rates on the country’s highest earners should rise when major parts of the 2017 tax law expire at the end of this year.
Mr. Hassett said Friday the White House expects the tax package to pass by early summer and “things will move really quickly.”
“We’ve had meetings with the so-called Big Six over and over against this data,” he said, referring to himself, House Speaker Mike Johnson, Senate Majority Leader John Thune, Treasury Secretary Scott Bessent, Senate Finance Chair Mike Crapo and House Ways and Means Chair Jason Smith. “And we expect probably to finalize the president’s thoughts on the taxes, at least first thoughts, probably opening salvos by sometime next week.”
Mr. Hassett added, “The tax policy of the president is going to be the decision of the president, and the president has advisers that say, ’Well, here are all of the options that you can consider. President Trump is almost always in the fairway ahead of watching his golf game, but on tax policy, he’s in the weeds and he’s going to make the decision.”
Conservative activists and small businesses pushed back on the White House and its congressional allies considering raising taxes on the top rate.
Fiscal tax hawks such as Grover Norquist, president of Americans for Tax Reform, were taken aback when they learned that anonymous White House staffers were urging Mr. Trump to agree to letting the top 37% tax rate rise to 40%.
Mr. Johnson, Louisiana Republican, and the rest of his GOP leadership team oppose letting the top rate lapse.
“I’m never for increasing taxes, ever,” he said. “I mean we are the Republican Party and we are for tax reduction for everyone.”
Sen. Ted Cruz of Texas said, “I think it is a mistake to raise taxes, and I don’t believe Republicans are going to do that.”
Mr. Norquist said the president made it clear he wanted to extend the tax cuts for all income brackets and that the issue polls well.
Also, the expiring tax rates in this income bracket are not just for wealthy individuals, but also small businesses that would get hit by a tax hike.
Republicans on Capitol Hill heard from 90 trade associations last week in a letter stating their opposition to the idea of a top rate of 40%.
The trade associations highlighted the federal tax code’s section 199A, which lets owners of pass-through businesses deduct up to 20% of their qualified business income from their taxable income in calculating their individual income tax liability.
It also noted section 1231, which deals with the tax treatment of gains and losses from the sale of certain business properties.
“The so-called ’millionaire tax’ in question — which actually kicks in at income around $620,000 — would saddle them with a tax hike that offsets about half the tax benefit of extending the section 199A deduction,” they wrote in a letter to Rep. Smith of Missouri and Sen. Crapo of Idaho.
“Coupled with the Net Investment Income Tax and state and local taxes, the proposal would impose marginal rates exceeding 40% on businesses that receive the full section 199A deduction, or twice the rate paid by C corporations,” they told the two Republican lawmakers, whose panels take the lead on taxation issues.
