Trump, GOP weigh surtax on wealthy, doubled deduction

President Donald Trump and congressional Republicans are considering an income tax surcharge on the wealthy and doubling the standard deduction given to most Americans, with the GOP under pressure to overhaul the tax code after the collapse of the health care repeal.

On the eve of the grand rollout of the plan, details emerged on Capitol Hill on Tuesday while Trump personally appealed to House Republicans and Democrats at the White House to get behind his proposal.

"We will cut taxes tremendously for the middle class. Not just a little bit but tremendously," Trump said as he met with members of the tax-writing Ways and Means Committee. He predicted jobs "will be coming back in because we have a non-competitive tax structure right now and we're going to go super competitive."

Among the details: repeal of the tax on multimillion-dollar estates, a reduction in the corporate rate from 35 percent to 20 percent and potentially four tax brackets, down from the current seven. The current top rate for individuals, those earning more than $418,000 a year, is 39.6 percent.

The goal is a more simple tax code that would spur economic growth and make U.S. companies more competitive. Delivering on the top legislative goal will be crucial for Republicans intent on holding onto their majorities in next year's midterm elections.

The tax overhaul plan assembled by the White House and GOP leaders, which would slash the rate for corporations, aims at the first major revamp of the tax system in three decades. It would deliver a major Trump campaign pledge.

The outlines of the plan were described by GOP officials who demanded anonymity to disclose private deliberations.

The plan would likely cut the tax rate for the wealthiest Americans from 39.6 percent to 35 percent. A new surcharge on wealthy taxpayers might soften the appearance of the wealthiest Americans and big corporations benefiting from generous tax cuts.

Republicans already were picking at the framework, pointing up how divisions within GOP ranks can complicate efforts to overhaul taxes as has happened with the series of moves to repeal the Obama health care law.

Details of the proposal crafted behind closed doors over months by top White House economic officials, GOP congressional leaders and the Republican heads of tax-writing panels in the House and Senate were set to be released Wednesday. Trump and the Republicans were putting the final touches on the plan when the Democrats were brought in. A senior Democrat saw it as the opening of negotiations.

Trump had previously said he wanted a 15 percent rate for corporations, but House Speaker Paul Ryan has called that impractically low and has said it would risk adding to the soaring $20 trillion national debt.

Trump said Tuesday some of the components included doubling the standard deduction used by families and increasing the child tax credit. He said the majority of Americans would be able to file their taxes on a single page. "We must make our tax code simple and fair. It's too complicated," Trump said.

Some conservative GOP lawmakers, meanwhile, dug their heels in on the shape of the plan.

Rep. Mark Meadows, head of the House Freedom Caucus, said he'd vote against tax legislation if it provided for a corporate tax rate over 20 percent, a rate for small businesses higher than 25 percent, or if it fails to call for a doubling of the standard deduction.

"That's the red line for me," Meadows said at a forum of conservative lawmakers. He noted he was speaking personally, not as head of the conservative grouping.

Disgruntlement came from Sen. John Kennedy, R-La., over the process of putting together the plan.

"I get that we want to move to 3 percent but I'd like to know how," Kennedy said referring to Trump's ambitious goal of annual growth in the economy through tax cuts. "I'm not much into all the secrecy," he said. "We need to do this by November, and at the rate we're going I'm not encouraged right now."

The Democrats, while acknowledging the tax system should be simplified, have insisted that any tax relief should go to the middle class, not the wealthiest. Tax cuts shouldn't add to the ballooning debt, the Democrats say.

Rep. Richard Neal of Massachusetts, the top Democrat on the Ways and Means Committee, came away from the White House meeting in a negotiating mood. "This is when the process gets kicked off," Neal told reporters at the Capitol.

The rate for wealthiest taxpayers shouldn't be reduced, he said. Democrats are concerned by indications from Trump and his officials that "they intend to offer tax relief to people at the top," he said.

Still, there may be room to negotiate over the Republicans' insistence on repealing the estate tax, Neal indicated, since "there are other things you can do with it" to revise it short of complete elimination.


Associated Press writers Ken Thomas and Matthew Daly contributed to this report.