• President Trump is urging Congress to consider raising taxes on the wealthiest Americans, potentially creating a new top income bracket and closing tax loopholes.
• The proposal is intended to offset the costs of extending the 2017 tax cuts and protect social safety net programs from budget cuts.
• The tax hike proposal has been met with mixed reactions within the Republican party, sparking debate and complicating ongoing budget negotiations.

President Trump has advocated for raising taxes on the wealthiest Americans as part of the budget reconciliation process. This proposal, which he discussed with House Speaker Mike Johnson, involves creating a new top income bracket for individuals earning over $2.5 million and increasing their tax rate potentially to 39.6%. This move is aimed at generating revenue to offset the costs of extending the 2017 tax cuts and shielding programs like Medicaid from budget reductions. This proposal has caused internal friction within the Republican party, highlighting divisions on fiscal policy and priorities.

• What: President Trump is advocating for a tax increase on the wealthiest Americans, potentially creating a new tax bracket for those earning over $2.5 million and closing certain tax loopholes, as part of budget reconciliation.
• Who: Key individuals involved include President Donald Trump, House Speaker Mike Johnson, Treasury Secretary Scott Bessent, former Vice President Mike Pence, and Senators Josh Hawley, Thom Tillis, Bernie Moreno, and Ron Johnson.
• When: The proposal was discussed by Trump and Johnson this week (early May 2025). The 2017 Tax Cuts and Jobs Act is set to expire at the end of the current year (2025).
• Where: The discussions and negotiations are taking place in Washington D.C., involving the White House and Congress.

Trump's proposal to raise taxes on the wealthy represents a notable shift from traditional Republican tax policy and highlights the complex political and budgetary considerations facing the GOP. The move appears to be driven by a desire to offset the costs of extending the 2017 tax cuts and to mitigate the political fallout from potential cuts to social safety net programs like Medicaid. However, the proposal has met with resistance from some Republicans, who argue that it would harm small businesses and undermine economic growth. This internal division underscores the challenges facing the GOP as it seeks to balance fiscal responsibility with political expediency. The proposal could reshape the tax landscape and influence the upcoming budget negotiations significantly.

Any suggestion that I've heard among some in and around the administration that we raise the top margin rate, the so-called millionaires tax, would be an enormous tax increase on small business owners across America. It needs to be opposed.

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?

President Trump's proposal to raise taxes on the wealthiest Americans has injected uncertainty into ongoing budget negotiations and exposed divisions within the Republican party. While the move may be intended to address budgetary constraints and protect social programs, it faces significant opposition from fiscal conservatives who prioritize spending cuts. The outcome of this debate will likely have significant implications for the future of tax policy and the direction of the Republican party.