House Republicans Shelve Millionaires Tax Hike in Sweeping Tax Bill
House Republicans have apparently abandoned plans to implement a new tax increase on millionaires as a means of funding President Donald Trump’s ambitious legislative agenda, dubbed the "big, beautiful bill." The House Ways and Means Committee, responsible for tax legislation, released a comprehensive 400-page document on Monday outlining proposals to permanently extend the 2017 Tax Cuts and Jobs Act (TCJA) enacted during Trump’s presidency, in addition to a range of other tax priorities championed by the former president.
The legislative package includes provisions to eliminate taxes on income derived from tips and overtime wages through the implementation of new tax deductions. In line with Trump’s pledge to reduce taxes on Social Security benefits for seniors, the bill proposes a temporary increase in the standard tax deduction available to seniors, effective from the end of last year through the beginning of 2029.
A controversial measure aimed at restricting funding for abortion providers has been included in the bill, potentially igniting a rebellion among House Republicans. The legislation also seeks to raise the debt limit by $4 trillion, fulfilling a specific request from Trump to address the looming risk of the U.S. running out of funds to meet its debt obligations sometime this summer, which could trigger a national credit default.
Notably absent from the extensive legislation is a proposal that surfaced last week suggesting the establishment of a new tax bracket for individuals earning $2.5 million or more annually, subjecting them to a 39.6% tax rate, which was the top tax rate prior to the TCJA’s reduction to 37%.
Conservative organizations, including Americans for Prosperity and the Heritage Foundation, vociferously opposed any tax increase on high-income earners. Prominent Republican figures, such as former Speaker Newt Gingrich and former Vice President Mike Pence, along with Pence’s advocacy group, Advancing American Freedom, also publicly expressed their opposition to the proposal.
Several House GOP lawmakers conveyed to Fox News Digital last week that they could not support a tax hike on millionaires. Two individuals familiar with the discussions told Fox News Digital on Monday that they did not anticipate the inclusion of the tax increase before the bill advanced through committee on Tuesday.
However, Republicans have identified alternative cost-saving measures within the legislation. These include stripping tax-exempt status from organizations that support terrorism and employing artificial intelligence (AI) software to identify and eliminate improper Medicare payments.
The bill also aims to significantly reduce tax breaks for professional sports team owners, a measure known as amortization, which allows owners to write off a portion of their purchase price.
Republicans are also targeting large private colleges and universities, including Ivy League institutions, with higher excise taxes, which are federal duties imposed on the net earnings of the schools’ investments.
The current excise tax rate is 1.4%. However, the proposed legislation would raise it to as high as 21% for the largest schools, such as Harvard University and Yale University, reflecting Trump’s ongoing conflict with the Ivy League regarding their funding.
The Ways and Means Committee is expected to advance its portion of the legislation on Tuesday afternoon. This is just one component of Trump’s comprehensive legislative agenda, which Republicans are attempting to pass through the budget reconciliation process.
By lowering the Senate’s threshold for passage from 60 votes to 51, the budget reconciliation process enables the party controlling Congress and the White House to bypass the minority party and enact sweeping legislation, provided it pertains to the national debt, taxes, or spending.
Trump intends for Republicans to utilize this process to advance his agenda on taxes, border security, immigration, energy, and defense.
Meanwhile, the U.S. currently faces a national debt exceeding $36 trillion. House Republicans have committed to identifying between $1.5 trillion and $2 trillion in cost savings in other areas to offset the costs associated with Trump’s new priorities and place the U.S. on a more sustainable fiscal trajectory.
The tax legislation also includes an increase in the maximum allowable child tax credit (CTC) from $2,000 to $2,500, along with additional tax relief for small business owners who file their company taxes under individual income tax brackets.
In what is considered a modest victory for Republicans in states with high costs of living, the legislation increases the state and local tax (SALT) deduction cap from $10,000 to $30,000 for both single filers and married couples. Married taxpayers filing separately will have a cap of $15,000.
The maximum deduction amount will be phased out for individuals with incomes exceeding $400,000, eventually returning to $10,000 once an individual’s income reaches $500,000. SALT deductions are primarily intended to benefit individuals residing in high-cost-of-living areas, particularly those in the suburbs of Democratic strongholds like New York and Los Angeles.
Republicans representing these areas have emphasized that increasing the $10,000 SALT deduction cap is crucial to their ability to remain in office and, consequently, to the GOP maintaining its majority in the House.
Several members of the SALT Caucus Republicans expressed dissatisfaction with the $30,000 cap last week, deeming it insufficient. It remains uncertain whether they will obstruct the final passage of the bill over this issue. At least one member of the group, Rep. Nicole Malliotakis, R-N.Y., indicated to Fox News Digital that she could support the new threshold.
The release of the legislation on Monday followed the unveiling of a portion of the tax plan by Republicans over the weekend. Further details, such as SALT deduction caps and potential new tax brackets, were still being finalized.
