In a move that suggests a clear break with conventional conservative politics, the US president is reportedly thinking of letting the top rate of income tax on high earners rise to where it was prior to 2017 legislation enacted under his first term.

US President Donald Trump is considering raising taxes on the wealthiest US citizens – adding a populist twist to a policy mix that might ease the path for other tax reductions, according to various media reports.

Trump has reportedly (Financial Times, May 10, other) proposed to raise taxes on people earning more than $2.5 million per year to almost 40 per cent, the level it reached before he enacted tax cuts in his first term, taking it down to 37 per cent. 

A major question being considered by wealth advisors – some of whom the author of this article met in New York last week – is the extent to which the changes made in the 2017 Tax Cuts and Jobs Act will be reversed, allowed to sunset, or altered. 

The sweeping US tariffs that Trump imposed by executive order on April 2, while they could change amid negotiations with a host of countries, threaten to push up prices of consumer goods and services on millions of Americans. Given his campaign on an anti-inflation platform last fall, Trump will want to be seen as favoring working class and middle-class citizens rather than those in the high net worth brackets. (Other issues that may not follow a conventional Republican playbook turn could be whether the hikes in thresholds on estate and gift taxes sunset at the end of this year, or are extended.)

Trump floated the proposal of tax hikes on the wealthy in a post on his Truth Social platform. “The problem with even a `TINY’ tax increase for the RICH…is that the Radical Left Democrat Lunatics would go around screaming, `Read my lips’,” he wrote, referring to President George HW Bush’s promise not to raise taxes in the 1988 election – a promise that later rebounded when taxes had to rise. 

A report by the FT said that as well as mulling possible tax hikes on top earners, Trump has indicated that he may end supposedly preferential tax treatment of private equity and hedge fund profits.”

Stories did not appear to indicate whether the administration is considering reverting to the pre-2017 approach of letting taxpayers deduct state and local taxes from their federal taxes. That change had hit people in relatively high-tax states such as New York, California and Illinois, to the benefit of states such as Florida, Texas, Tennessee and New Hampshire.