WASHINGTON, (Reuters) – President Donald Trump said yesterday that taxes on rich Americans might rise, as he pursues a tax code overhaul and reaches out to both Democrats and Republicans in a push to win support for a plan still far from complete.
As Trump prepared to host the two top congressional Democrats at a White House dinner, Treasury Secretary Steven Mnuchin told Fox News that the administration’s tax cuts could be paid for through economic growth.
The White House and the Republican-led Congress have not put forth a detailed tax plan, despite months of high-level talks that had until recent days excluded Democrats.
House of Representatives Speaker Paul Ryan said an outline of a plan would be unveiled during the work week beginning Sept. 25, with congressional tax-writing committees crafting detailed legislation in the subsequent weeks.
Mnuchin told Fox the administration would use its own economic assumptions to gauge the impact of its tax cuts on the federal budget deficit and the $20 trillion national debt, a key issue in Washington’s intensifying tax debate.
“It will be revenue neutral under our growth assumptions,” Mnuchin said. The administration believes that tax cuts will lead to much faster growth than do congressional analysts or private forecasters.
“So, we can pay for these tax cuts with economic growth,” he added.
As for taxing the rich, Trump said after a meeting with lawmakers that the wealthy “will not be gaining at all with this plan. … If they have to go higher, they’ll go higher, frankly.”
Further details were not immediately available from the White House.
Democrats have criticized Republican tax overhaul efforts as benefiting mainly the wealthiest Americans and corporations.
Tax experts said Trump could raise taxes on high-income people by lowering the cap on mortgages eligible for interest deductions to $500,000 from $1 million. Another step might be to close a loophole that lets Wall Street fund managers pay low taxes on much of their income, analysts said.
Trump might also propose eliminating the deduction for state and local taxes, then use the revenue raised to fund tax cuts for the middle class, leaving top earners with a higher effective tax bill. There has also been talk in the Senate about increasing tax rates on capital gains and dividends.
But even with those changes, analysts said it was not clear top earners would end up paying more overall, partly because Trump has also proposed cutting the top individual tax rate.
Steven Rosenthal, a senior fellow at the nonpartisan Tax Policy Center think tank in Washington, said Trump was unlikely to raise taxes on investment income.
Instead, he said, Trump could close a loophole that largely benefits super-rich financiers, although they may be able to find other ways to avoid taxes.
“That’s what I would expect him to do, take a symbolic but ineffective step,” Rosenthal said.
Trump was hosting Senate Democratic leader Chuck Schumer and House Democratic leader Nancy Pelosi on Wednesday evening to discuss the legislative agenda with a focus on the tax overhaul after meetings with bipartisan groups of lawmakers on Tuesday night and Wednesday afternoon.
“We should be able to come together to make government work for the people,” Trump told reporters as he met with eight Democratic and five Republican House members to try to find common ground on taxes as well as immigration and healthcare.
Asked what his message was to skeptical conservatives who worry he is cozying up to Democrats, Trump said: “I’m a conservative, and I will tell you I’m not skeptical. And I think that if we can do things in a bipartisan manner, that’ll be great. Now it might not work out.”
Trump blindsided Republican leaders last week by striking a deal with Schumer and Pelosi on the U.S. debt limit and federal spending for three months.
Ryan said the outline being worked on now would reflect the consensus of the House Ways and Means Committee, the Senate Finance Committee and the Trump administration.
“I would love to have the Democrats supporting and working with us in a constructive way on tax reform, but we’re going to do it no matter what,” Ryan said.
Asked about Trump’s comment on a possible tax increase for the wealthy, House Ways and Means Chairman Kevin Brady said: “My goal is to lower taxes on every American as much as possible and help them keep more of what they earn.”
There has been no comprehensive overhaul of the U.S. tax code since 1986, and the starkly different visions embraced by the two parties for how to move forward promise to make the task difficult.
Some Republicans chafed at Trump’s Democratic outreach.
“The problem here is we don’t have a clue what’s in the tax plan, now Trump is talking about doing bipartisan stuff with Chuck and Nancy on taxes,” said David Brat, a member of the hard-line conservative House Freedom Caucus.