Unlike President Trump and congressional Republicans, we’re not letting go of our proposal to raise taxes on the rich. While they may have ideas and “concepts of a plan,” we are the ones with a legitimate, well-constructed legislative agenda that will deliver real and substantive relief to working people.
In late March, news broke that some Republicans were considering raising income taxes on millionaires as part of their “big, beautiful” immigration, defense, energy, and tax bill. Some specific proposals floated include: allowing the top marginal income tax rate to rise from 37% to 39.6%, as it is scheduled to do when many individual provisions of the 2017 Tax Cuts and Jobs Act expire at the end of the year; creating a new bracket for those earning over $1 million; and also creating an even higher top tax bracket for taxpayers earning more than $3 million or $5 million. The motivation behind these ideas is to raise revenue to offset the cost of some of Trump’s other tax proposals—particularly his campaign trail promises to eliminate taxes on tips, overtime pay, and Social Security benefits—and to blunt Democrats’ attacks that their bill is another handout to the rich at the expense of working people.
The concept of raising taxes on the rich seemed to pique the interest of the Republican Party for a little while, particularly among members of the new populist faction like Vice President JD Vance, Missouri Senator Josh Hawley, and former Trump advisor Steve Bannon. (Bannon supports the idea for all the wrong reasons—he thinks it will help secure Trump an unconstitutional third term in office—but let’s save that conversation for a separate Closer Look.) But judging from last week’s reports of the harsh reactions from more traditional conservatives and business groups, it’s safe to say the idea is politically dead. Besides being at fundamental odds with their core economic philosophy which ties low taxes with economic growth, hard-liners argue that raising taxes on the wealthy would discourage entrepreneurship and hurt small business owners.
President Trump himself came out against the idea of raising income taxes on the rich in a TIME Magazine interview to mark his first 100 days in office. He offered the following response on the subject:
“I certainly don’t mind having a tax increase, and the only reason I wouldn’t support it is because I saw Bush where they said, where he said “Read my lips” and he lost an election. He would have lost it anyway, but he lost an election. He got beat up pretty good. I would be honored to pay more, but I don’t want to be in a position where we lose an election because I was generous, but me, as a rich person, would not mind paying and you know, we’re talking about very little. We’re talking about one point. It doesn’t make that much difference, and yet, I could just see somebody trying to bring that up as a subject, and, you know, say, “Oh, he raised taxes.” Well, I wouldn’t be, really, you know, in the true sense, I wouldn’t. I’d be raising them on wealthy to take care of middle class. And that’s—I love, that. I actually love the concept, but I don’t want it to be used against me politically, because I’ve seen people lose elections for less, especially with the fake news.”
When asked whether it would help cover the cost that would be lost from enacting some of his other tax proposals, Trump further added, “I would not mind personally paying more. But the concept is something that may not be acceptable to the public.”
To be blunt, we think he’s wrong on all accounts in his reasoning for opposing raising taxes on millionaires. We’d obviously be “honored” to pay more in taxes too, but unlike Trump, we actually did our homework on the subject and can confidently say that the concept is acceptable to the public. In recent years, poll after poll after poll after poll has found strong support among the American public—including a majority of Republican voters—for raising taxes on the wealthy and corporations. Even a poll that we sponsored last year among our own millionaire class found strong support for the notion.
Trump’s primary concern should be doing what’s right for working people, not protecting his and his party’s political prospects. But the numbers show that, even if political prospects are all he cares about, he should be running towards progressive tax reform as fast as he can, not away from it.
For what it’s worth, Trump was right to suggest in his TIME interview that the proposals that members of his party are floating to raise income taxes on millionaires are “very little.” They are a step in the right direction that we naturally support, but they don’t go far enough to achieve the transformative tax reform that our country really needs. This is because the proposals involve raising taxes on ordinary labor income and not investment income, which is how the wealthiest of the wealthy make most of their money. In other words, while it would impact high earners like bankers, lawyers, and professional athletes, it would not impact members of America’s ultra-wealthy class like Elon Musk, Jeff Bezos, or Mark Zuckerberg whose income is derived from stocks, real estate, and other assets in the form of capital gains and dividends, which are taxed at preferential rates that would not be increased by the proposal.
So Trump has thrown cold water on the idea of raising income taxes on the rich, and while we’re sad, we know it’s not much of a loss in the grand scheme of things. Now, however, we’re paying attention to the new income tax idea that Trump is actively promoting that threatens to do serious harm to working people.
Last week, on social media and in remarks to reporters that caught his own party by surprise, President Trump suggested that the US could eliminate income taxes on earnings under $200,000 and have tariffs make up the lost revenue. It’s certainly admirable that Trump seemingly wants to help working people, but once again, he didn’t do his homework. For one thing, the government currently raises a great deal more revenue from income taxes than it does from tariffs. Tariffs would need to be four times higher than they are today to fully replace income taxes, which is particularly problematic given that, thanks to Trump’s new tariffs, America now has the highest tariff rate of any developed country.
The other issue with Trump’s income tax elimination idea has to do with the fact that tariffs fall hardest on low-income households. This is because, compared to high-income households, low-income families spend a higher percentage of their earnings on food, clothing, and other essentials that will inevitably become more expensive under higher tariffs. Under Trump’s tariffs currently in effect, in 2026, the poorest 20% of Americans will pay an average 6.2% of their income in increased taxes from tariffs, while the richest 1% will pay just 1.7% of their income. We can expect these figures to be even more regressive if Trump gets his way and jacks up tariffs to replace income taxes.
In other words, Trump may think he would be doing Americans who make less than $200,000 a service by eliminating their income tax responsibilities. But really, he’d just be replacing one tax with another one that, in reality, would be far, far worse.
We’ve told you before about our “Cost of Living” Tax Cut Act proposal, which is one of the four pieces of legislation that make up our AMERICA 250: The Money Agenda platform. If Trump is looking for a real way to provide tax relief to working people AND meaningfully raise taxes on the rich—which we know Trump “personally” loves – this is the way to do it.
The “Cost of Living” Tax Cut Act would do two things:
- Provide a Cost of Living Exemption (COLE) on federal taxes up to a reasonable threshold for the cost of living for a single adult with no children (approximately $40,000 per year).
- Implement a surtax on incomes over $1 million, transferring the responsibility for the lost revenues from the working class to the millionaire class. A 3% surtax would be instituted on any income—that is, including the investment income of the ultra-wealthy—over $1 million and an 8% surtax would be instituted on any income over $10 million.
We are not going to pretend that our “Cost of Living” Tax Cut Act would magically eliminate the gross levels of inequality our country is currently experiencing. It would be a step in the right direction. To really do that, we need to fix the way that we pre-distribute income before taxes come into the equation, in addition to drastically reforming the tax code to rein in the obscene accumulations of wealth by America’s billionaires. Specifically, we need to ensure that people earn enough money at their jobs to be able to afford basic essentials, which will involve raising the federal minimum wage to a living wage. We also need to reduce the cost of living and ensure that people aren’t paying out the wazoo for their groceries, rent, and gas just to line the pockets of price-gouging corporate executives.
Unlike what Trump is threatening to do, our “Cost of Living” Tax Cut Act will not take more money out of working people’s pockets. We will guarantee that the income tax system does not tax people into poverty (or further into poverty) by allowing people to keep more of their hard-earned, precious dollars. And the best part is that we’ll make millionaires like us make up any of the revenue difference.
Republicans on the House Ways and Means Committee are reportedly in the process of marking up tax legislation for their “big, beautiful” bill, with the hope of passing a package by July 4th. We are inching closer and closer to the “Super Bowl of Tax,” and we need to be ready to fight back as soon as their bill drops.
We’re ready to do just that and actually deliver real relief for working people with our “Cost of Living” Tax Cut Act.