President Trump’s 2017 tax cut, the Tax Cuts and Jobs Act, was an unmitigated success and a signature accomplishment of the first Trump administration. The Trump tax cut lowered individual income tax rates and corporate taxes and made other changes that led to unprecedented economic growth.
Unfortunately, there are voices purporting to speak for Trump who want to poison upcoming tax reform legislation by adopting former Vice President Kamala Harris’s proposal to increase the top tax rate on high earners.
These populist voices on the right — who sound like socialists — should be ignored, because their idea to hike taxes is neither popular nor good tax policy.
Congress needs to act fast, because the law extending tax cuts for individual filers expires at the end of the year. If Congress passes a clean extension of existing tax cuts under the 2017 law, jobs will be created, the economy will expand and taxpayers will be allowed to keep more of their own hard-earned money.
The Tax Foundation estimates that “permanently extending the expiring individual, estate, and business tax provisions would boost long-run economic output by 1.1 percent, national income by 0.4 percent, the capital stock by 0.7 percent, wages by 0.5 percent, and hours worked by 847,000 full-time equivalent jobs.” A clean extension is the best path forward.
The only way Congress could snatch defeat from the jaws of victory is if they change provisions of law and insert tax hikes to make a Congressional Budget Office score look better. Lost revenues should not be a concern, because, as the Tax Foundation found, economic growth will help fill any gap. If tax reform is done right, after-tax incomes would rise by 2.9 percent, with 62 percent of filers seeing a tax cut.
The bottom line is that Congress should extend existing tax cuts without looking for other tax hikes to offset lost revenue, because hiking taxes on some to pay for tax cuts for others will undo all the good of the legislation. Furthermore, Congress can implement DOGE cuts into the budget to help close the deficit.
There is an emerging cadre of populists on the right — led by Oren Cass, chief economist of American Compass — who are cheerleading for Trump to adopt the Harris tax increase proposal. This new generation of progressives on the right are protectionists who want to punish America’s most successful companies with antitrust investigations while also pushing for punishing taxes on successful large and small businesses.
Those who listen to this new brand of progressives on the right will end up sounding more like Sen. Bernie Sanders (I-Vt.) than former President Ronald Reagan when this all plays out. They will also damage Trump’s effort to extend a popular tax bill.
These left-leaning Republicans are trying to brand the Harris tax hike idea as a Trump proposal. As The Hill reported last week, “Republicans in Congress are considering increasing taxes on the rich as a part of President Trump’s ‘big, beautiful bill’ of ambitious legislative priorities, a striking development that breaks with decades of party orthodoxy and is spurring alarm bells from traditional conservatives.” Loud populist voices in the Republican Party have been successful so far in rebranding the Harris tax hike as one coming from the White House.
Trump promised not to raise taxes and was very critical of the Harris proposal during the campaign. The president’s most recent promise on taxes came during his address to Congress on March 4, where he said, “we are seeking permanent income tax cuts all across the board.” He campaigned against Harris’s plan to raise taxes on the top rate, and he mocked Democrats for campaigning on theme “would you please vote for me to raise the tax” and argued that “they’re going to raise it up to 39 or 40 percent or even 50 percent.”
It makes no sense for the president to listen to saboteurs in his own administration who want to undo the good work of the 2017 tax bill and adopt an idea that Trump campaigned against.
In the end, Trump will walk away from this unpopular and economically destructive idea.
Brian Darling is former counsel for Sen. Rand Paul (R-Ky.).