As Republicans debate a path forward for their sweeping budget bill, it’s become increasingly clear that the Grand Old Party is growing comfortable with targeted tax hikes. Over the past few months, President Donald Trump has repeatedly floated creating a new tax bracket for the highest earners and raising taxes on carried interest. And if you listen to Republican legislators, you’ll hear that these ideas have found a toehold in both chambers of Congress.
The latest bill passed by the House last week raises taxes on wealth that’s been gifted to certain universities or used to create private foundations, and it caps the maximum value of itemized deductions for the highest earners. GOP lawmakers have reportedly at least discussed other tax changes that run counter to what you’d traditionally expect from conservatives, including raising the corporate rate.
Departure from the Norm
The current tax policy conversation among Republicans marks a far cry from the party’s orthodoxy that stipulated “no new taxes.” The targeted levies in the “One, Big, Beautiful Bill” that awaits Senate consideration are at least partly designed to offset the cost of similarly narrow tax cuts for groups that arguably buoyed Trump on the campaign trail, like tipped employees and seniors.
It’s especially surprising to see new revenue-raising ideas following the GOP’s electoral sweep last November. Right now, Democrats don’t have the votes to affect the decisions being made about taxes, meaning they didn’t influence Republicans to consider hiking taxes. This underscores that within the Republican Party, there’s growing interest in raising taxes on some to cut taxes for others, a tactic typically associated with the left.
Key Democrats have proposed bolder tax code changes targeting wealth, including a wealth tax on unrealized capital gains. Eventually, dynamics in Washington will shift, and bipartisan tax legislation, or a Democrat-led bill, will gain momentum. So, while the tax bill presently making its way through Congress avoids broad tax hikes, a future bill may go well beyond the handful of provisions that target certain “elite” institutions and groups for tax revenue.
Changes on the Horizon
Planners and their clients should stay alert to these political dynamics since tax code changes could target the $84 trillion great wealth transfer. As this wealth changes hands, Congress could strategically steer some of it into the Treasury Department. House Republicans laid a marker by proposing Congress redirect money that was previously dedicated toward charitable causes through private foundations, with Ways and Means Chairman Jason Smith (R-Mo.) arguing that many foundations too closely resemble hedge funds that promote left-wing policies. After universities and private foundations, House Republicans could look to tax other pools of institutional wealth. The Senate hasn’t shown the same eagerness to target “elite” institutions for revenue, but the upper chamber still may rubber-stamp the tax increases when they vote on the GOP’s broader budget bill this year.
A few Republican leaders have signaled an interest in working on bipartisan tax legislation that focuses on widely supported ideas after the current partisan budget bill becomes law. Whether driven by populist instincts, fiscal pressures or shifting political winds, Republicans are clearly rethinking their approach to taxation—and they’re doing it without Democratic input, for now. Still, the groundwork being laid today could tee up the next bipartisan tax deal, especially if consensus builds around popular policies like the Child Tax Credit or affordable housing incentives. For families, planners and institutions managing significant wealth, the message is clear: the tax policy landscape will remain dynamic in the years to come as Republicans reckon with how to raise revenue and how far they’re willing to go when it comes to taxing wealth.
#GOP #Budget #Bill #Signals #Wealth #Taxes #Increasingly #Table