Washington – The race to pass a massive Republican legislative agenda is heating up, and at the center of the drama is a surprising request from former President Donald Trump. In a phone call with Speaker Mike Johnson (R-La.) on Wednesday, Trump reportedly urged Johnson to include two significant changes to the bill: raising the tax rate on the highest earners and closing the “carried interest” loophole. This unexpected move could dramatically alter the already complex negotiations and potentially derail the GOP’s ambitious plan.
The Stakes Are High
The current bill, championed by Republicans, seeks to extend Trump’s 2017 tax cuts, bolster funding for immigration enforcement and defense, and raise the debt limit. However, securing enough savings to make the bill viable has been a persistent challenge. Adding Trump’s demands – particularly a tax hike on the wealthiest – introduces a new layer of complexity and resistance.
Trump’s Reasoning: A Shift in Strategy?
Trump’s request is a significant departure from his previous statements. Just last month, he dismissed the idea of increasing taxes on millionaires, arguing it would “disruptive” and lead to a loss of wealthy individuals, ultimately harming the economy. He stated, “You’ll lose a lot of money if you do that. 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.”
However, sources indicate that Trump is now advocating for a rate increase, believing it’s necessary to secure the necessary savings for the bill. The proposed change would revert the top tax rate for individuals earning $2.5 million or more annually from 37% to 39.6%, a rate that existed before the 2017 tax cuts. This move would also aim to fund middle and working-class tax cuts and protect Medicaid funding, according to one GOP source.
The Carried Interest Loophole: A Key Battleground
Alongside the tax hike, Trump is pushing for closing the “carried interest” loophole, a provision that allows hedge fund managers and private equity executives to pay lower tax rates on profits. This has been a long-standing point of contention, and its inclusion would likely face strong opposition from within the GOP.
A Race Against Time
With the ambitious goal of passing the final package before Memorial Day, House GOP leaders are scrambling to find a workable solution. The Ways and Means Committee is scheduled to mark up its portion of the reconciliation bill next week, but is still grappling with thorny issues, including the state and local tax deduction (SALT).
The question remains: Can Speaker Johnson and the GOP leadership overcome their internal divisions and Trump’s last-minute demands to pass a massive bill before the deadline?
Sourced from https://www.nbcnews.com