Trump eyes tax-code overhaul, with emphasis on middle-class break

Tax Return AP FBN

On the day the Senate moved on long-promised health-care legislation, President Donald Trump signaled his next priority: overhauling the tax code to push corporate rates down and give middle-class taxpayers a break, even if it means some of the wealthiest pay more.

"The people I care most about are the middle-income people in this country, who have gotten screwed," Mr. Trump told The Wall Street Journal on Tuesday, reiterating that he wants to bring down the corporate tax rate to 15%. "And if there's upward revision it's going to be on high-income people."

Sitting behind his desk in the Oval Office, Mr. Trump hopscotched across a variety of policy and personnel topics over the course of the 45-minute interview.

The president repeated his criticism of Attorney General Jeff Sessions for recusing himself from a probe into Russian meddling in the 2016 election, declining to say the former Alabama senator's job was safe.

He said his front-runners to be the next chairman of the Federal Reserve board of governors early next year would be the incumbent, Janet Yellen, and Gary Cohn, director of the National Economic Council.

On foreign affairs, he said that he expected Iran to be found noncompliant with the terms of a landmark nuclear deal sealed under President Barack Obama when the issue comes back up for review in September. And, following a message he posted to Twitter early Tuesday, he said the U.S. and the U.K. are in talks about a comprehensive trade deal that would be ready as soon as the U.K. exits the European Union.

Ticking off what he sees as his accomplishments, Mr. Trump mentioned his appointment of Supreme Court Justice Neil Gorsuch, his deregulatory efforts and changes at the Veterans Affairs Department, which has pushed to reduce wait times for patients needing care.

Asked about disappointments, Mr. Trump made a reference to the health-care debate. "I have to see where we are with this," he said in the hours before the Senate voted to advance the debate on its health-care bill. Besides a tax code overhaul this year, he said he placed a priority on improvements in the nation's infrastructure.

His term so far also has been marked by investigations into what U.S. intelligence agencies say was a campaign backed by the Kremlin to influence the presidential campaign in Mr. Trump's favor. Investigations in Congress and by special counsel Robert Mueller are looking into the Russian meddling and whether any members of the Trump campaign colluded, which Mr. Trump has repeatedly denied. Russia has denied any interference.

The Russia investigations often have stymied the White House's ability to make progress on its agenda, and Mr. Trump reiterated his recent criticism of Mr. Sessions.

Mr. Trump on Tuesday blamed Mr. Sessions's recusal as the reason the Justice Department named Mr. Mueller as special counsel. Mr. Mueller's appointment came after Mr. Trump fired former FBI Director James Comey, who had been overseeing the investigation.

When asked whether Mr. Mueller's job is safe, Mr. Trump responded: "I have no comment yet, because it's too early. But we'll see. We're going to see."

He also declined to offer a vote of confidence in Mr. Sessions, who was one of the earliest Washington supporters of Mr. Trump's candidacy. Mr. Sessions's endorsement was seen at the time as a tough blow to Trump rival Sen. Ted Cruz, who was counting on evangelical support in Southern states, including Alabama. Mr. Trump suggested that his own popularity in Alabama was the reason for Mr. Sessions' endorsement.

Mr. Sessions backed Mr. Trump at a rally that drew tens of thousands in Mobile, Ala., one of the largest rallies of the campaign at that point. "He looks at the 40,000 people and he probably says, 'What do I have to lose?'" Mr. Trumpsaid. "So it's not like a great loyal thing about the endorsement."

A Justice Department spokesman declined to comment.

During the interview, Mr. Trump appeared relaxed in the company of close aides, which included his daughter and White House adviser Ivanka Trump, Chief of Staff Reince Priebus, Communications Director Anthony Scaramucci, Hope Hicks, the White House director of strategic communications, and Mr. Cohn.

Mr. Trump praised the arrival of Mr. Scaramucci, who was appointed Friday, suggesting that he would help settle internal unrest and backbiting that has characterized the West Wing.

He quipped that this type of palace intrigue was "White House stuff, where they're fighting over who loves me the most." Mr. Trump said he has no other immediate changes planned for his senior staff.

Mr. Scaramucci had endorsed two of Mr. Trump's rivals during the primary campaign. Mr. Trump shrugged that off on Tuesday. He said Mr. Scaramucci offered his support before he was ready to enter the race. "His first choice was Trump," Mr. Trump said. "It's important to say that."

Asked if Mr. Cohn was a candidate to become the next Federal Reserve chairman, Mr. Trump said, "He doesn't know this, but yes, he is."

He said he would wait until the end of the year to make a decision, even if it would require a confirmation hearing. He predicted that such a process would "go quickly."

"I've known Gary for a long time, but I've gained great respect for Gary working with him," Mr. Trump said. "So Gary certainly would be in the mix."

Mr. Cohn responded by laughing, and placing his hands over his ears. "This is an interview with the president," he said, declining additional comment.

Mr. Trump said he has "a lot of respect" for Ms. Yellen, praising the decisions to keep interest rates low and crediting her for keeping the U.S. dollar "not too strong." "She is in the running to stay," he said.

Turning to taxes, Mr. Trump echoed some of the populist themes from his presidential campaign. He described twin imperatives in overhauling the tax structure: boosting economic growth and easing the tax burden on middle-class families.

"I have wealthy friends that say to me, 'I don't mind paying more tax,' " the president said.

He added that "we have to take care of middle-income people in this country. They built the country. They started this whole beautiful thing that we have. And we have to take care of them. And people have not taken care of them, and we're going to."

Mr. Trump's aides are working with top Republican lawmakers on a proposal that would bring about the first major rewrite of the tax code in 30 years. Mr. Trump and White House officials have been vague on significant middle-class provisions, such as the personal exemption, while promising specific benefits for high-income households such as the repeal of the estate tax and alternative minimum tax. Mr. Trump didn't elaborate Tuesday on how he planned to favor the middle class.

On Iran, Mr. Trump said the administration had given Iran "the benefit of every doubt" about their compliance with the 2015 multinational nuclear deal. The president must certify to Congress every 90 days that Iran is in compliance with its obligations. The president made such a certification earlier this month.

But when certification comes up again, Mr. Trump said he believes Iran will be judged not compliant with the agreement. He said he would be prepared to overrule his own advisers in proclaiming that Iran hasn't met the terms of the agreement.

"We've been extremely nice to them in saying they were compliant," Mr. Trump said. "Personally, I have great respect for my people, but if it was up to me, I would have had them noncompliant 180 days ago."

He added: "We'll talk about the subject in 90 days but I would be surprised if they were in compliance."

The interview came hours before the Senate voted to advance health care legislation that in recent weeks had appeared stalled.

Mr. Trump has suggested different approaches toward abolishing the Affordable Care Act signed into law seven years ago. At times he has called for letting Obamacare,as it is known, collapse before ushering in a replacement. At other times he has said the best strategy would be repealing the law and quickly approving a new system.

GOP leaders have primarily pursued a strategy of repealing and replacing the health law simultaneously. In the interview, Mr. Trump said he preferred that option.

The "trouble with [straight] repeal is you'll have millions of people out there that ... will say, 'Well, you know, how do we know we're going to have health care?' And I hate to do that to people," he said.

He added: "So I'd rather see replace. I'd rather add the replace. And we have a very good plan."

--Richard Rubin and Felicia Schwartz contributed to this article.

Write to Peter Nicholas at and Michael C. Bender at