President Donald Trump‘s proposed millionaire tax, which aims to increase the tax rate on income over $2.5 million, is being seen as largely symbolic and unlikely to significantly impact revenue or inequality by experts.
What Happened: Howard Gleckman, from the Urban-Brookings Tax Policy Center, stated that the proposed tax change would not significantly affect revenue or inequality, reported Fortune. The tax hike, which would increase the rate from 37% to 39.6% on income over $2.5 million, is expected to raise about $8.2 billion this year and impact around 80,000 households.
Most millionaires and billionaires in the U.S. earn a small portion of their income in the form of salaries, with the majority coming from capital gains, which are taxed at a lower rate. Program director at the Institute for Policy Studies, Sarah Anderson, told the publication that the proposed tax increase would have minimal impact on billionaires as they take very little compensation from their companies.
“It’s not going to change the revenue very much and it’s going to give a lot of Republicans heartburn,” stated Garrett Watson from the Tax Foundation.
Why It Matters: The Republican Party, long opposed to tax hikes, is now considering them to help cover $4.5 trillion in costs from extending the 2017 tax cuts and advancing Trump’s priorities like exempting Social Security income and tips from taxes.
Trump’s tax proposal comes amid a political storm within the Republican Party. Trump’s support for a tax increase on millionaires sparked controversy and debate among Republicans and conservatives. Opposition to tax hikes is strong among traditional Republicans, including Trump advisors Steve Moore and Larry Kudlow and GOP Sen. Dave McCormick (R-Pa.) and Ted Cruz (R-Texas). However, Sen. Mike Crapo (R-Idaho) expressed potential openness to being persuaded.
Earlier in May, Trump’s ambitious budget package, dubbed the “Big, Beautiful Bill,” was facing a bumpy road in Congress as Republican lawmakers worked to balance tax cuts with spending priorities.
Just days later, Trump revived the push for a tax increase on the wealthiest Americans as part of his forthcoming tax package. The White House believes that this tax increase on the wealthiest will facilitate substantial tax cuts for the middle and working class and safeguard Medicaid.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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