As the stalemate over health care continues in the Senate, some of the recent focus has shifted to tax reform, the next box on President Donald Trump's agenda many are looking to check in hopes of a much-needed legislative win. White House chief strategist Steve Bannon has proposed raising the top marginal tax rate from 39.6 percent to 44 percent, according to Bloomberg.
The middle class tax cuts proposed in Trump's reform would be paid for by the increase of the tax hike on America's top earners (over $5 million annually), however it's unclear if Congressional Republicans would get behind it. One conservative lawmaker told Bloomberg that the rate was pitched at 42 percent, which they said some Republicans would support albeit a low corporate tax rate "and other changes like repealing the alternative minimum tax."
In order to get support among conservatives, the corporate tax rate would have to be low enough to boost economic growth and prevent base erosion. Republican leaders in Congress have proposed a 20 percent rate, and even recently suggested a 22 percent rate before going back to their original proposal, according to the lawmaker. The current top corporate tax rate is 35 percent.
When Treasury Secretary Steve Mnuchin unveiled a one-page tax reform memo in April, he proposed lowering the corporate tax rate to 15 percent, which according to the Bloomberg source, would be "a better target for policymakers to get support for the higher rate on top earners."
Whether Trump would support Bannon's proposal is still unknown, though he's indicated in the past that "he’s focused on tax changes that would help the middle class." Still, Bloomberg found that Trump's tax plan would "mostly benefit top earners."
Even if tax reform means that the wealthiest Americans may have to pay more under Bannon's tax proposal, they'd be getting a lot of it back thanks to the GOP's health care plans. According to an analysis by money-in-politics watchdog group MapLight, the health care legislation being debated in the Senate "could save top members of the Trump administration an average of six figures on their annual tax bills if it includes a full repeal of former President Barack Obama’s signature health care reform law."
The analysis of financial disclosure forms found the repeal of a 3.8 percent tax on investment income — used to fund subsidies that provide health coverage to roughly 10 million low- and middle-income Americans — would have saved Trump and his top two dozen officials between $3.1 million and $7.8 million, leading to an average tax reduction ranging from $124,200 to $313,700.