Trump says rich might pay more in taxes, talks with Democrats

Trump says rich might pay more in taxes, talks with Democrats
PHOTO: Reuters

WASHINGTON - President Donald Trump said on Wednesday that taxes on rich Americans might rise, as he pursues a tax code overhaul and reaches out to both Democrats and Republicans in a push to win support for a plan still far from complete.

Trump met with the two top congressional Democrats over dinner at the White House in a search for common ground that could make it easier to get a tax-cut package through Congress.

Both sides said the meeting, which covered an array of legislative issues, was productive.

Earlier, Treasury Secretary Steven Mnuchin said tax reductions would be paid for by faster economic growth.

The White House and the Republican-led Congress have yet to put forth a detailed tax plan, despite months of high-level talks that had until recent days excluded Democrats.

House of Representatives Speaker Paul Ryan said an outline of a plan would be unveiled during the work week beginning Sept. 25, with congressional tax-writing committees crafting detailed legislation in the subsequent weeks.

Mnuchin told Fox News Channel the Trump administration would use its own economic assumptions to gauge the impact of its tax cuts on the federal budget deficit and the $20 trillion national debt, a key issue in Washington's intensifying tax debate.

"It will be revenue neutral under our growth assumptions,"Mnuchin said. "So, we can pay for these tax cuts with economic growth."

The administration believes tax cuts will lead to much faster growth than do congressional analysts or most private forecasters, a likely fault line in the debate ahead.

As for taxing the rich, Trump said during a meeting with a bipartisan group of lawmakers - his second in as many days - that the wealthy "will not be gaining at all with this plan. ... If they have to go higher, they'll go higher, frankly."

In a phone call with a small group of reporters, Marc Short, Trump's legislative affairs director, said the president was not talking about higher tax rates, but that other changes in the tax code could affect the wealthy and how much they pay, the publication Roll Call reported.

TAXING THE RICH

Democrats have criticised Republican tax overhaul efforts as benefiting mainly the wealthiest Americans and corporations.

Tax experts said Trump could raise taxes on high-income people by lowering the cap on mortgages eligible for interest deductions to $500,000 from $1 million.

Another step might be to close a loophole that lets Wall Street fund managers pay low taxes on much of their income, analysts said.

Trump might also propose eliminating the deduction for state and local taxes, then use the revenue raised to fund tax cuts for the middle class, leaving top earners with a higher effective tax bill.

There has also been talk in the Senate about increasing tax rates on capital gains and dividends.

But even with those changes, analysts said it was not clear top earners would end up paying more overall, partly because Trump has also proposed cutting the top individual tax rate.

Steven Rosenthal, a senior fellow at the nonpartisan Tax Policy Center think tank in Washington, said Trump was unlikely to raise taxes on investment income.

Instead, he said, Trump could close a loophole that largely benefits super-rich financiers, although they may be able to find other ways to avoid taxes.

"That's what I would expect him to do, take a symbolic but ineffective step," Rosenthal said.

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