Washington: Former U.S. President Donald Trump has privately urged House Speaker Mike Johnson to consider raising taxes on the wealthiest Americans and eliminating the carried interest loophole for Wall Street investors, according to two individuals familiar with the matter.
The phone call between Trump and Johnson took place on Wednesday, as the Republican-led House continues to navigate internal divisions over a comprehensive tax reform package. Lawmakers are attempting to reconcile Trump’s push for major middle- and working-class tax cuts with the challenge of not exacerbating the country’s $36 trillion national debt.
Trump’s involvement has added weight to negotiations on the proposed extension of the 2017 Tax Cuts and Jobs Act. The updated plan also aims to eliminate federal taxes on tip income, overtime pay, and Social Security benefits. Republicans are racing to finalize what Trump has described as “one big beautiful bill” in time for a House vote before the Memorial Day recess on May 26.
According to one source, Trump supports raising the top marginal income tax rate from 37% to 39.6% for individuals earning over $2.5 million, and for joint filers with income exceeding $5 million. The plan would reportedly include exemptions for small businesses. “This will help pay for massive middle and working-class tax cuts, and protect Medicaid,” said a separate source familiar with the discussions.
Trump’s position reflects growing pressure from his MAGA-aligned populist base to target tax relief toward working Americans, rather than the wealthy elite. However, the proposal has encountered resistance from within the party. While Trump’s allies have floated the idea, House Speaker Johnson and several senior Republicans have expressed concern about raising tax rates. Treasury Secretary Scott Bessent publicly stated last week that Trump had ruled out such a tax hike—highlighting the evolving dynamics within GOP leadership circles.
The House’s current draft for tax legislation attempts to offset the cost of tax cuts by slashing federal spending on Medicaid, nutrition assistance programs, and environmental tax incentives. These proposals have sparked concern among centrist Republicans, potentially threatening intra-party unity on the issue.
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“The spending reduction side of this equation has been the most challenging, which is a sad commentary on my party and my conference. But it’s the reality,” House Budget Committee Chairman Jodey Arrington told reporters.
Arrington and other fiscal conservatives argue that without identifying at least $2 trillion in federal spending reductions over the next decade, the long-term extension of Trump’s 2017 tax cuts may be financially unviable. Raising tax revenues through a higher top rate could help bridge that fiscal gap without sacrificing popular benefits.
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Representative Jason Smith, who chairs the influential House Ways & Means Committee, recently said his panel is considering closing existing tax loopholes that disproportionately benefit wealthy investors, including the carried interest provision.
While a final version of the bill remains in flux, sources suggest that Trump’s renewed interest in fiscal equity may reshape the trajectory of Republican tax policy heading into the 2025 election cycle.
