Donald Trump: ‘This is about the middle class. It’s really about the middle class and about jobs’
President Donald Trump has voiced support for a higher tax bracket for the wealthy after criticism that the Republicans’ long-planned tax overhaul would mostly benefit rich Americans.
The Republican tax plan released last month proposed slashing seven tax brackets to three, and reducing the top rate from 39.6 per cent to 35 per cent. But Paul Ryan, the House speaker, on Friday said the plan would include a fourth bracket to ensure that “we don’t have a big drop in income tax rates for high-income people”.
Mr Trump on Sunday said in an interview with Fox News that he would prefer not to have what he referred to as a fifth bracket — counting people with incomes so low they do not pay federal income tax as a separate bracket — but said he wanted “to make sure the middle class gets taken care of” even if that required another category.
“This is about the middle class. It’s really about the middle class and about jobs. And if I feel that the middle class is not getting what I want them to get, and that’s going to be a lot, because I want them to get really a lot. Then I’m going to do a fifth bracket, which will give them more,” Mr Trump said.
The move comes after criticism that the proposals would constitute a big tax cut for the super-rich. The non-partisan Tax Policy Center estimated that the preliminary tax plan would reduce the federal government’s revenues by $2.4tn over the next decade and $3.2tn in the following 10 years, and would primarily benefit the wealthiest Americans and hurt the upper middle class.
Mitch McConnell, leader of the Senate Republicans, said in a separate interview on Sunday that while they had yet to produce a final bill, he expected that the legislation would be passed by the end of the year. He hoped that it would still be revenue-neutral thanks to the faster economic growth the tax cuts would entail.
Mr Trump touted the regulatory rollback he had started as another growth-friendly measure that would ultimately lift the economy and improve the government’s tax take. But when asked by Fox Business host Maria Bartiromo whether technology companies should be more heavily regulated he said: “You know that’s an argument that’s happening right now . . . Honestly, I can go either way on it.”
The details of the Republican tax plan are still unclear, but are expected to be unveiled soon. The Senate passed a 2018 budget plan on Friday by 51 votes to 40 with just one Republican — Rand Paul of Kentucky — opposing it.
The budget resolution paves the way for a procedure called “reconciliation” that prevents the Democrats from filibustering the incoming tax legislation, and gives the Republican party a chance to move on from the collapse of its healthcare reform plan.
After largely discounting the chances of US tax reform this year, investors have in recent weeks grown more hopeful, helping the US stock market rise to touch a new record last week. A Goldman Sachs index of companies that in effect pay higher corporate tax rates rose 1.6 per cent last week, outpacing the broader market.
Mr Trump also discussed the chairmanship of the US Federal Reserve, and indicated that the field had been narrowed to three candidates: Fed governor Jerome Powell, Stanford University economist Professor John Taylor and the incumbent Janet Yellen, who the president said he liked “a lot”.