Trump tells Congress to raise taxes on the rich in budget bill

President Donald Trump instructed congressional Republicans this week to raise taxes on the wealthiest earners as part of his “big, beautiful bill,” rattling his party’s brittle consensus on economic issues and muddlingthe GOP’s path toward enacting his campaign promises.

Congress is working to extend lower rates for individuals from Trump’s 2017 Tax Cuts and Jobs Act that are set to expire at the end of this year. Trump, in recent conversation with House Speaker Mike Johnson (R-Louisiana), said Congress should raise taxes on some of the highest earners, according to two people familiar with the president’s position who spoke on the condition of anonymity because they weren’t authorized to discuss the issue publicly.

Administration officials have discussed several options for doing so, including allowing the top tax rate to revert back to Obama-era levels. Treasury Secretary Scott Bessent has also floated creating a tax bracket for those earning more than $5 million per year.

The current top tax bracket, which pays a 37 percent rate, applies to those with more than $626,350 in earnings, or $751,600 for married couples filing jointly.

Trump is also seeking to close a tax loophole that allows investment fund managers to pay lower tax rates, and another provision that would subject major stadium and arena owners to higher tax bills, the people said.

The White House did not immediately respond to a request for comment. Johnson’s office declined to comment.

The position on individual rates is a stark reversal for Trump and could shatter talks around congressional Republicans’ fragile tax legislation.

Sen. Josh Hawley (R-Missouri) said he had no problem with raising taxes on the richest taxpayers. But he acknowledged that most Senate Republicans do not feel the same way.

“Zero, probably,” Hawley said when asked how many other GOP senators supported Trump’s proposal. “Maybe one or two.”

Johnson, Senate Majority Leader John Thune (R-South Dakota) and tax writers from both chambers have been preparing legislation for months to extend the 2017 tax cuts for all income levels and incorporate Trump’s campaign promises to end taxes on tips, overtime wages and Social Security benefits. Recently, Trump reiterated another desire, to allow deductions of interest on loans for purchases of American-made automobiles.

But that list of priorities has a hefty price tag — as much as $11.95 trillion over 10 years, according to the nonpartisan Committee for a Responsible Federal Budget — sparking tension within the GOP ranks between Trump loyalists and fiscal hawks. Some Republican House members from California and the Northeast have also been pushing to raise the cap on state and local taxes — often called SALT — that can be deducted from federal returns, another expensive priority that fiscal conservatives dislike.

Republicans are trying to match tax cuts with spending reductions to keep the legislation from exploding the national debt. Both chambers, which are using what’s known as the budget reconciliation process to bypass a potential Democratic filibuster in the Senate, seek to cut $2 trillion in federal spending over 10 years, though they say they won’t factor in the $5.5 trillion cost of extending Trump’s 2017 tax law — only the price of any new tax reductions and national defense spending.

House GOP leaders in recent days have ruled out certain cuts to social safety net programs that the GOP had earlier targeted to meet budget goals. Johnson said the House would not cut the amount states receive to fund Medicaid, and House Agriculture Committee Chairman Glenn Thompson (R-Pennsylvania) told the Washington Post that his committee would not rescind federal anti-poverty food assistance money. Hard-liners had been eyeing both of those areas as potential sources of savings.

Those moves would make much of Trump’s tax agenda financially unattainable and have led GOP lawmakers to a standstill in negotiations on the thorniest fiscal issues.

In April, some of Trump’s closest advisers began pitching raising taxes on millionaires, the Post reported, and the proposal met a lukewarm reception in the Capitol.

“I think it will be a part of it, if we can get the contours right and not sweep in small businesses. There’s a way to do that,” Sen. Thom Tillis (R-North Carolina), a member of the tax-writing Finance Committee, told the Post this month. “… But you’ve got to figure out what ‘rich’ is. ‘Rich’ isn’t $500,000, or even $2 million when you’re talking about small businesses. We’ve got to get it right.”

Other lawmakers said spending cuts were more important.

“I totally disagree with that,” Sen. Bernie Moreno (R-Ohio) said last week of allowing lower tax rates on the highest earners to expire but extending the rest of the law’s lower rates. “I think the simplest path is always the best path: Keep [the Tax Cuts and Jobs Act] as is and make it permanent; reset the [research and development] and investment tax credits to 100 percent; and then eliminate income taxes on tips, Social Security and overtime. I think that’s the simplest, most effective tax package you could move forward, and anything beyond that I don’t think is passable. We don’t have a revenue problem in this country. We have an expense problem. So why are we even going down that path?”

Sen. Ron Johnson (R-Wisconsin), a budget hawk on the Finance Committee, has repeatedly said he would not support Trump and the GOP’s bill because it adds too much to the national deficit and needs additional spending cuts rather than new tax revenue.

Asked last week about raising taxes on wealthier filers, he said: “I don’t see that happening. The only way it happens is if we don’t extend the current tax code, which is what I’d do today. I wouldn’t throw that in.”

The idea is similar to what President Joe Biden and later Vice President Kamala Harris campaigned on during the 2024 race for the White House.

The Democratic ticket suggested allowing the 2017 tax cut to expire for filers earning more than $400,000 and raising taxes on businesses.

Theodoric Meyer contributed to this report.