WASHINGTON — President Donald Trump privately pressed House Speaker Mike Johnson, R-La., during a phone call Wednesday to add two additional proposals to the massive package for his agenda: one to raise the tax rate on the highest earners and the other to close the so-called carried interest loophole, according to a Republican leadership source, as well as two other GOP sources familiar with the call.
Trump’s eleventh-hour requests add a new wrinkle to an already complicated process for Republican lawmakers as they desperately try to find enough savings for the bill, which seeks to extend his 2017 tax cuts, boost funding for immigration enforcement and defense and raise the debt limit.
The White House has kicked around the idea of hiking the top tax rate for the wealthiest people for the past few months, and it now believes it is close to finalizing a topline number for the bill, according to one of the GOP sources familiar with the call.
The other GOP source familiar with the call said Trump is considering allowing the rate on individuals making $2.5 million or more annually to revert from 37% to the pre-2017 39.6% to protect Medicaid and help pay for middle- and working-class tax cuts.
Punchbowl News was first to report the call.
While Republicans have floated the idea of allowing tax rates on top earners to go up when major parts of the 2017 tax law expire at the end of this year, GOP leaders have resisted a tax increase on the wealthy, traditionally anathema within the party.
Trump also shot down the idea of increasing taxes on millionaires last month, saying it would be “disruptive.”
“You’ll lose a lot of money if you do that,” he said at the time. “And other countries that have done it have lost a lot of people. They lose their wealthy people. That would be bad, because the wealthy people pay the tax.”
But with Trump pushing Johnson to reverse course and House Republicans struggling to make the math work for their massive bill, leadership is now reconsidering its options.
A senior House Republican closely involved in the negotiations confirmed to NBC News that there has been revived talk inside the House GOP conference over the last 24 hours about potentially allowing the top tax rate to go up, as well as closing the carried interest loophole.
Asked how seriously the new proposals are being taken, the House Republican said, “At this point, we have to find the savings, so I think everything is being taken under consideration.”
The tax-writing House Ways and Means Committee plans to mark up its part of the reconciliation bill next week, but it is still sorting through a number of thorny issues, such as how to raise the cap on the state and local tax deduction, or SALT. House GOP leaders are aiming to pass the final package on the floor before Memorial Day, which is an ambitious timeline.
