- Republicans are considering keeping the top tax rate for people earning over $US1 million a year at 39.6% by creating another tax bracket in their reform plan.
- This would blunt criticism from Democrats that the GOP tax plan primarily benefits the wealthy.
- Some pro-tax cut Republicans may not be on board with the idea.
One of the most prominent rallying cries for Democrats concerned about the Republican tax reform plan is that the package would be a huge boon for millionaires and billionaires.
For instance, Senate Minority Leader Chuck Schumer slammed the GOP’s “total devotion to millionaires and billionaires” after reports that the tax plan could change the caps on retirement savings to help the budget maths work.
Republicans seem to be listening. Axios’ Jonathan Swan reported Sunday that the lead GOP tax writers on the House Ways and Mean committee are considering adding another tax bracket to the three included in the current tax reform framework. This bracket would apply to people making $US1 million or more annually and would keep their top marginal rate at the current 39.6%.
This isn’t to say that millionaires and billionaires may not see their tax bill go down — for example, provisions such as a tax cut for pass-through businesses could still be
used by the wealthiest to lower their burden. But the move would allow the GOP to say they’re focusing on tax cuts for the middle class.
According to an analysis by the Tax Policy Center of the GOP’s tax reform framework, 80% of the benefit from the proposed changes would go to the top 1% of income earners by 2027.
The new tax bracket is also not a done deal, with tax cut advocates likely opposing keeping the rate the same for earners over $US1 million.
Ways and Means chairman Kevin Brady is aiming to debut the new tax legislation next week after the House passes the Senate’s budget resolution, which is heading for a vote this week.
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