Trump changed idea over taxes for the richer

8 years ago - Published in Finance, Fundamental Analysis

President Donald Trump said on Wednesday that taxes on rich Americans might rise, as he pursues a tax code overhaul and reaches out to both Democrats and Republicans in a push to win support for a plan still far from complete.

Trump met with the two top congressional Democrats over dinner at the White House in a search for common ground that could make it easier to get a tax-cut package through Congress.

“The rich will not be gaining at all with this plan,” Trump told reporters while meeting with the bipartisan Congressional Problem Solvers Caucus at the White House. “We are looking for the middle class and we are looking for jobs – jobs being the economy. So we’re looking at middle class and we’re looking at jobs,” Trump said.

He added “I think the wealthy will be pretty much where they are, pretty much where they are … If they have to go higher, they’ll go higher.”

GOP congressional leaders are working to draft tax legislation and aim to introduce it in the coming weeks. Overhauling the American tax system was a key goal of the Republican government when Trump won the White House and the GOP held both chambers of Congress last year.

Trump is aiming to win support for the GOP tax plan from Democrats, many of whom have argued that reform should not include major tax cuts for wealthy Americans.

Democrats have criticized Republican tax overhaul efforts as benefiting mainly the wealthiest Americans and corporations.

Tax experts said Trump could raise taxes on high-income people by lowering the cap on mortgages eligible for interest deductions to $500,000 from $1 million. Another step might be to close a loophole that lets Wall Street fund managers pay low taxes on much of their income, analysts said.

Trump might also propose eliminating the deduction for state and local taxes, then use the revenue raised to fund tax cuts for the middle class, leaving top earners with a higher effective tax bill. There has also been talk in the Senate about increasing tax rates on capital gains and dividends.

But even with those changes, analysts said it was not clear top earners would end up paying more overall, partly because Trump has also proposed cutting the top individual tax rate.

Trump also touted plans to end the estate tax, which only applies to the wealthiest Americans who leave estates over $5.45m. On Wednesday, Trump also insisted he was seeking to reduce the corporate tax rate to 15% – down from 35% – despite his treasury secretary Steve Mnuchin’s acknowledgement one day prior that such a drastic cut may not be obtainable.