Million dollar bracket in the works for GOP tax plan

The Republicans on the House Ways and Means Committee — engaged in a high-pressure, high-stakes tax policy rewrite — are currently exploring not cutting the income tax rate for people who earn $1 million or more per year.

  • Right now, the marginal tax rate for anyone who makes $418,000 or more per year is 39.6 percent. The Republicans’ opening gambit — secretly negotiated for months, and endorsed by Trump — would have cut the highest tax rate to 35 percent.
  • But now, House Republicans’ thinking has changed. Under their current thinking, people who earn between $418,000 and $999,999 will be in a lower tax bracket. But those earning $1 million or more will not.

Opting to keep taxing million-dollar-earners at the current 39.6 percent-rate will help stem the deficit increase from tax cuts for corporations and the middle class.

Caveat: The million dollar bracket plans haven’t been finalized and could change this week, as committee Republicans finalize their tax bill during meetings on Tuesday and Wednesday.

Potential blowback: If the Committee Republicans ultimately decide not to cut the income tax rate for million-dollar-earners, much of the Republican donor class and Reaganomics community (including anti-tax activist Grover Norquist) will feel betrayed.

“I understand compromise, but why compromise with the sin of envy?” Norquist told us. “This isn’t the dumbest idea I have ever heard of. But it is in the top 20.”

Norquist argues this won’t placate Democrats — who inevitably will charge that Trump’s tax overhaul is just designed to help the rich — but will alienate conservatives.

Meanwhile, one administration official told me Trump doesn’t really care about this issue.

 

 

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