[UNITED STATES] As Republicans grapple with the financial underpinnings of a wide-ranging tax and spending proposal, former President Donald Trump has suggested raising taxes on the wealthiest Americans—a move that diverges from longstanding GOP orthodoxy and lacks backing from party leaders.
The proposal would effectively restore the top federal income tax rate to its 2017 level for individuals earning $2.5 million or more annually, rolling back a key component of Trump’s own 2017 tax legislation.
The idea surfaces amid growing debate over the long-term economic and fiscal consequences of the Tax Cuts and Jobs Act (TCJA). While the law delivered short-term economic gains, critics argue it disproportionately favored corporations and high-income households while inflating the federal deficit. A 2019 report from the Congressional Research Service found the legislation had only a modest impact on GDP growth and contributed to an estimated $1.9 trillion revenue shortfall over ten years.
According to reporting from NBC, Trump urged House Speaker Mike Johnson (R-La.) during a phone call on Thursday to consider raising the top marginal tax rate and closing the carried interest loophole—two changes that could generate additional revenue to preserve Medicaid funding and extend tax relief for middle- and lower-income Americans.
The carried interest provision, which allows private equity and hedge fund managers to pay the lower capital gains rate on earnings typically taxed as ordinary income, has been a frequent target of reform efforts from both parties. The Joint Committee on Taxation estimates that closing the loophole could bring in around $14 billion over a decade. However, prior attempts to eliminate it have faced stiff resistance from the financial industry’s lobbying efforts.
Trump echoed his support for the measure in a post on Truth Social Friday, signaling he would “graciously accept” a tax increase on top earners if it meant supporting lower-income Americans. “Republicans should probably not do it, but I’m OK if they do!!!” he wrote.
The comments reflect a notable shift for Trump, who has long championed broad tax cuts. Some political analysts interpret the move as a bid to shore up support among working-class voters ahead of the 2024 election, while others view it as a tactical play to encourage GOP lawmakers to consider alternative ways to raise revenue.
The TCJA, passed during Trump’s first term, delivered sweeping cuts to both individual and corporate tax rates. Many of its provisions are set to expire after 2025 unless Congress acts. Notably, the law lowered the top individual income tax rate from 39.6% to 37%. In 2025, the 37% rate applies to single filers earning over $626,350.
If Trump’s proposal were adopted, the highest earners would see a return to the pre-TCJA rate of 39.6%, last in effect between 2013 and 2017. For much of the early 2000s, the top rate stood at 35%, while the peak historical rate reached 94% during the mid-1940s, according to the Tax Policy Center. However, analysts caution that headline rates alone do not reflect how much income was actually taxed at those levels, nor the role of deductions and exemptions over time.
Meanwhile, progressive Democrats continue to push for more aggressive tax reforms targeting ultra-wealthy individuals. Senator Elizabeth Warren has proposed an “Ultra-Millionaire Tax” on households with net worths exceeding $50 million—a plan that has yet to gain bipartisan traction but underscores growing public scrutiny of income and wealth inequality.
With Republicans currently controlling Congress, they have the option to pass major fiscal legislation through reconciliation, a procedure that allows budget bills to clear the Senate with a simple majority, bypassing the filibuster.
Even so, disagreements persist over the structure and financing of the GOP’s multi-trillion-dollar plan. According to Natasha Sarin, president of the Yale Budget Lab and a law professor, lawmakers are contending with a fundamental arithmetic challenge. “We’re not getting anywhere close to the type of revenue increases we need,” she told on Friday.
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