Trump proposes tax hike on ultra-wealthy to fund new economic package

President Donald Trump is urging lawmakers to raise taxes on some of the wealthiest Americans as a way to help pay for the extensive economic package he is promoting as part of his 2024 campaign agenda.

According to individuals familiar with the discussions, quoted by Bloomberg, Trump’s proposal includes the creation of a new top income tax bracket of 39.6% for individuals earning at least $2.5 million annually, or $5 million for couples filing jointly. This would mark a return to the pre-2017 top marginal tax rate, which Trump himself cut to 37% during his first term.

The former president discussed the idea directly with House Speaker Mike Johnson during a phone call on May 7. In that conversation, Trump also renewed his call to eliminate the carried interest tax break—a longstanding tax benefit used by venture capitalists and private equity managers to pay a lower tax rate on investment gains.

Representative Jason Smith, who chairs the House Ways and Means Committee, is expected to meet with Trump on May 9. According to a congressional aide, Smith will assure Trump that the forthcoming tax legislation will align with his stated priorities.

It remains uncertain whether Trump’s proposal would include changes to the current tax code's treatment of small business income, much of which is reported through individual tax returns.

The push to raise the top marginal rate and end the carried interest loophole is emerging as Congress grapples with how to finance what Trump has dubbed the “one big beautiful bill”—a sweeping, multi-trillion-dollar package aimed at extending key provisions of his 2017 tax cuts and advancing new tax relief proposals.

Republicans are under pressure to rein in the overall cost of the package, especially amid deep divisions within the party over cutting entitlement programs such as Medicaid. By targeting high earners, Trump’s plan would offer GOP lawmakers more room to fulfil campaign pledges, such as making household tax cuts permanent and eliminating taxes on tips and overtime pay.

Preliminary estimates suggest that reinstating the 39.6% rate on top earners would raise $67.3 billion over ten years. Eliminating the carried interest preference could bring in an additional $6.7 billion during the same period, according to figures shared with Bloomberg News by the non-partisan Tax Foundation.

Despite his own history of opposing tax increases, Trump has recently signalled openness to the idea—albeit with some reservations. He has previously suggested that higher taxes on the wealthy could prompt capital flight or alienate voters, potentially hurting Republicans at the polls.

Nevertheless, Commerce Secretary Howard Lutnick voiced support for the move in an interview with Bloomberg Television, calling it a “smart” way to generate funding for Trump’s proposed tax cuts targeting hospitality workers and senior citizens.

Still, key Republican figures remain divided. Representative Kevin Hern of Oklahoma, a member of the House tax-writing panel, confirmed that both the top-rate hike and the carried interest elimination are under active discussion, but said no final consensus has been reached. “Anytime the president asks for something, we will consider it,” Hern said.

Senator Mike Crapo, who chairs the Senate Finance Committee, expressed scepticism during an appearance on Hugh Hewitt’s conservative radio program. “I’m not excited about it,” Crapo said of the proposal to raise taxes on the wealthy, “but there are a number of people in both the House and the Senate who are.” He added, “If the president weighs in in favour of it, then that’s going to be a big factor that we have to take into consideration.”