House Republicans Propose Leaving Income Tax Rate Unchanged For Million-Dollar Earners

Now that the Senate has passed the $4 trillion federal budget, unlocking the reconciliation process and clearing the way for tax reform, Republicans on the House Ways and Means Committee are hashing out the finer points of tax reform. And in keeping with the spirit of Treasury Secretary Steven Mnuchin’s promise that the lopsided nature of the proposal’s cuts (which allocated 80% of the benefits to the top 1% of earners) would be corrected in committee, a group of House Republicans are considering a radical proposal that brings them into direct conflict with Mnuchin and Gary Cohn, who the group derisively refer to as “the Democrats.”

Axios reports that House Republicans are exploring not cutting the income tax rate for people who earn $1 million or more per year.

Right now, the marginal tax rate for anyone who makes $418,000 or more per year is 39.6%. The Republicans' expected opening offer, which Axios says has been secretly negotiated for months and has received the blessing of the president, would have cut the highest tax rate to 35%.

Rep. Carlos Curbelo, R-Fla., Rep. Vern Buchanan, R-Fla., and House Ways and Means Committee Chairman Kevin Brady, R-Texas

But now, some House Republicans are pushing for people who earn between $418,000 and $999,999 to be in a lower tax bracket, while those earning $1 million or more will keep paying at the 39.6% rate.

Assuming this proposal isn’t immediately killed by the GOP leadership, it would theoretically allow Republicans to kill two birds with one stone by rebutting criticisms that the bill’s tax cuts overwhelmingly favor the wealthy while also helping to minimize the increase in the deficit that has worried some deficit hawks like Senator Rand Paul.

However, the proposal’s survival is far from assured. Withholding a tax cut from million-dollar-earners would enrage much of the Republican donor class and anti-tax activists like Grover Norquist.

Asked by Axios about the proposal, Norquist said the idea isn’t the dumbest he’s ever heard, but one of the top 20 dumbest.

Norquist also argues this won't placate Democrats, who inevitably will charge that Trump's tax overhaul is just designed to help the rich, but will alienate conservatives.

If appended to the final version of the law, the measure would also enrage many of Mnuchin and Cohn’s banker friends.

However, Axios seems to think it has a shot at survival, since president Trump reportedly doesn’t really care all that much about the individual rate for high earners.  

"He basically thinks they [rich people] are fine and he believes they don't care that much about the individual rate so long as they get all the other goodies, like the corporate rate and expensing," the official said.

Of course, Axios has repeatedly proven that it’s not above reporting rumors and legislative proposals that, while they may have been considered at one point, never really had much of a chance at making it into the final bill.

As far as the timeline for tax reform is concerned, the House expects to pass the Senate version of the budget this week. Shortly after, a timeline for when House Republicans will release their tax cut bill should emerge.

For what it’s worth, Mitch McConnell took to the Sunday shows this weekend to insist that Republicans would succeed in passing tax reform by year’s end. He also insisted Republicans “aren’t abandoning revenue-neutral tax reform,” before repeating the dubious claim that the federal government will be able to minimize the deficit by bolstering economic growth above 3% - well above its post-crisis average.

The report also appears to support widely held suspicions that the final bill may not bear much of a resemblance to the original nine-page plan, which was itself a departure from a one-page outline unveiled in April.


Ramesees Bes Mon, 10/23/2017 - 11:04 Permalink

I'm neutral on the policy, but it's good politics. High earners, despite the caricature of the limousine liberal, do vote Republican, so this hurts Rs more.  It's just a move so the MSM can't paint the tax reform as a giveaway to the highest earners.   

In reply to by Bes

Hugh_Jorgan The Alarmist Mon, 10/23/2017 - 11:45 Permalink

I'm no 1%er and but the system is already unjust.

* The top 50 percent of all taxpayers pay 97% of all individual income taxes!

* The top 1 percent pay 40% of all individual income taxes!

Absolving a low wage earner of their civil concerns in lieu of a system of dependency is a vile injustice.

We need to sunset the illegal "progressive" income tax (it does not conform to the definition of a tax). Take 10 years to do it but end with a flat tax and do away with the 100,000 IRS employees, the 88,000 page tax (cheat) code, and bring the economy back from the brink.

In reply to by The Alarmist

alfaafla Hugh_Jorgan Mon, 10/23/2017 - 12:06 Permalink

Man, you need to do some more studying. Everyone knows a flat tax disproportionately hurts lower incomes more so.   10% tax on lower income folks vs a 10% tax on higher income folks has much different pain points and therefore are not equal.  As a lower income earner, if 10% of my income goes to bread / basics, do you think that, as one who is part of the throng, will be silent when folks in the "same bracket" afford the same items as me but only cost them <1% of their incomes?  We have progressive taxes because it takes into account marginal allocation/distributions.  Further, and even more illumating,  you're arguing that there is no wide gap in societal wealth between haves/have nots and therefore not an issue. We all know the gap is signficant and warrants attention / solutions. Your solution does not compute.   If you argued raising progressive taxes, on average, for everyone - that would be more reasonable than a flat tax. 

In reply to by Hugh_Jorgan

Ben Tornilloed alfaafla Mon, 10/23/2017 - 12:06 Permalink

The solution to income inequality is NOT taxes.  The solution is honest money.  Maff may not be your strong point put an equal percentage is just that.  It is equal, as a percentage.  Lower income taxpayers NEED to be taxpayers.  And don't give me all that shit about taxes they pay.  Because they DON'T pay the most important one.

In reply to by alfaafla

alfaafla Ben Tornilloed Mon, 10/23/2017 - 12:34 Permalink

I mean, honest money is part of the equation already, whether or not we have it is another thing, but to argue that taxes don't have an impact on wealth is rediculuous. Making coherent arguments, or even spelling for that matter, may not be your strong point, but atleast be descriptive and explain yourself because no one knows what the hell you're talking about when you say "they DON"T pay the most important one". Afterall, honest money =/= taxes and you seemingly suggest it at the end of your statement that that is where they should be accountable.  Further, your reference to how much they pay seems to be in reference to the guy I was quoting. You're all over the map, bud. 

In reply to by Ben Tornilloed

Ben Tornilloed alfaafla Mon, 10/23/2017 - 15:34 Permalink

Where the fuck did I make an argument that taxes don't have an impact on wealth?   Of course they do dingle berry.  My statement was that it is "ridiculous" to use tax policy to solve wealth inequality.  To suggest we have honest money is beyond all credulity.Since I assumed you had a passing knowledge of where federal revenue (ie tax coercion) comes from, I left out the part about FEDERAL INCOME TAXES only being paid by a small percentage of the tax paying public.  I wasn't aware that I was supposed to post comments in dissertation format.  Use your fucking brain.

In reply to by alfaafla

InsaneBane Bes Mon, 10/23/2017 - 11:10 Permalink

It´s all the act of 1871 and you will find out. We have been sold out many years ago even before the Federal Reserve act of 1913. So Trump is president of the Corporation..Corpo = corpse i.e. a dead letter. Conclusion we lost our constitution in 1871 it has been circumvented by this act, since the Act of 1871 which established the District of Columbia, we have been living under the UNITED STATES CORPORATION which is owned by certain international bankers and aristocracy of Europe and Britain.

In reply to by Bes

takeaction Bes Mon, 10/23/2017 - 11:18 Permalink

FLAT RATE DONALD.........Get some fucking BALLS.  .Do I make a Million I don't.  Do I think people that make a million or more a year should be taxed more.  FUCK NO.  Just because YOU or I don't make that type of money....Yet.  (I'm trying) Should not be the reason for taxing "Those" people more.  "Those" people should be praised and rewarded.  Not FUCKING PUNISHED.  The rate should go my opinion...Because who uses all of the services?People under $10K a year 70% tax rate because you are the mooches using EBT/Earned income Child credit, Drinking too much, Drugs, having the police over at your house multiple times per month because of the domestic Violence....  Your Healthcare is paid for by others..........Then as you dig yourself out of your go nowhere life you get rewarded.....0-$10K                 70% Rate$11K -$20K          45% Rate$21K-$30K           30% Rate$31K-$50K            25% Rate$50K and up         18% RateThis would promote EVERYONE to work their ass off to always make 50K or more.  Am I crazy??Or I would be in for a SUPER FAIR TAX.   15% across the board.  NO DEDUCTIONS...NO IRS.....DONE.....How is that not fucking FAIR? 

In reply to by Bes

HillaryOdor franklin23 Mon, 10/23/2017 - 14:20 Permalink

The economy does not grow from spending Mr. Keynes.  It grows from savings, which leads to investment and production, thereby giving you the means to spend, first recognized by Jean Baptiste Say.   In an honest economy money hoarding by the wealthy would actually help the poor.  Reducing the velocity of money puts deflationary pressures on commodity prices, effectively raising the spending power of the rest of society.  When you have political centralization and technocratic central planning all this goes out the window, as does my concern for the average person.  The people chose this culture.  They chose poverty.  They chose subservience.  They're just getting what they asked for.  "I didn't know" is not a valid excuse.  It is your life.  You have a responsibility to know these things.Also regulations (overwhelmingly supported by ignorant poor people) also hurt the poor the most, who can't afford an army of lawyers to navigate the bureaucracy in order to start their small business, entrepreneurialism being the best way to get out of poverty.   But this is the society people want.  So they're going to get it, good and hard. It's funny.  People always tell me if I don't vote I can't complain.  I think it's the opposite.  If you do vote then you sanction the system and everything that happens you are complicit in.  So the voters shouldn't be complaining actually.  You're getting what you wanted, to be ruled over.

In reply to by franklin23

loveyajimbo Mon, 10/23/2017 - 11:13 Permalink

Democrappers don't seem to understand that "rich" folks are the ones that create most jobs... liberals should focus their attacks on generational wealth... and push for a large inheritance tax (50% with zero exemptions) for people like the Kennedys, Gates, Buffett, Soros, Bezos, etc.  Add means testing for Medicare and Social security.Use the proceeds to pay for lowering the Medicare age to 50, solving most of the healthcare issues too.

Friedrich not Salma Mon, 10/23/2017 - 11:21 Permalink

$2,000! Every man, woman and child residing in the USA should have paid an extra $2,000 last year in taxes just to balance the budget to make up for the $666 billion shortfall. Another way to put this is that we common folk paid in $1.5 trillion but needed $.666 trillion more which means we should have all paid nearly 50% more, each, in personal taxes to fund the gap.

If you're paying in a 25% bracket it should be 37%. If you're in a 39.6% bracket, it should be nearly 60%. That's plus property taxes and state income taxes, of which states are underfunded, sales tax, payroll tax, etc. We are spending damn near 100% of what everyone earns.

Are business owners really going to work their lives, taking risks by hiring new employees and spending capital for no risk-to-reward compensation?

The two lights at both ends of the tunnel are oncoming trains.

NeedleDickTheB… Mon, 10/23/2017 - 11:21 Permalink

But now, some House Republicans are pushing for people who earn between $418,000 and $999,999 to be in a lower tax bracket, while those earning $1 million or more will keep paying at the 39.6% rate.I am amazed how few people understand how personal tax liabilities are calculated.  Politicians, media and even financial types seem to be clueless.  Let me makes this perfectly clear (channeling Richard Nixon) -- marginal tax rates are meaningless!Anyone making $1 million or more does not pay taxes at the 39.6% rate.  We have a graduated tax system so they are only paying a 39.6% tax rate on any ordinary income earned in excess of $1 million.  A married couple earning $1 million of ordinary income and no deductions (AGI = taxable income) would have an effective tax rate of 34.1%.  Capiche?The question of whether 34.1% is too high or too low is a totally separate discussion.

Dode415 Mon, 10/23/2017 - 11:23 Permalink

Every single loophole they were going to close to help fund tax cuts and keep the overall impact on the deficit within $1.5bn are now being rejected so unless they assume completely unrealstic economic growth there is no way this gets passed. in the unlikely event it does get passed the US will go the same way as Kansas where this experiment was tried and failed miserably

ultraticum Mon, 10/23/2017 - 11:23 Permalink

Mitch McConnell:  "revenue-neutral" tax reform.As I've said countless times, whenever they say "revenue" in the context of THEFT, you can be sure they are 100% co-opted by the Statist establishment.  It is only "revenue" for the monopoly on force and coercion.  And this deuche bag calls himself a republican?

Blue Dog Mon, 10/23/2017 - 11:26 Permalink

They need to cut taxes for the rich because they do the most investing. That will lead to more investment. It's only common sense. Taxes on corporations need to be cut. They're the highest in the industrialized world.

tangent Mon, 10/23/2017 - 11:33 Permalink

Normally I'm a free speech advocate, but anyone who thinks anyone else should pay more than 25% total income tax needs an immediate summary execution. Even most Democrats don't want a tax rate over 25% for the wealthy.

Golden Phoenix Mon, 10/23/2017 - 11:55 Permalink

Financial planners tell us the average American needs to save at least a million dollars just to survive retirement. Being a millionaire isn't a luxury, it's a necessity. There are 11 million millionaires in the US. Inflation has made them commonplace. People railing for more taxes on these 'rich' people are idiots. Taxation is theft.