Trump surprises GOP with new tax hike for the wealthiest

Donald Trump, who previously gained popularity as a proponent of tax cuts for the wealthiest, surprises politicians with his latest proposal. Presenting a new initiative, he announced a tax rate increase for individuals earning more than £2 million annually.

According to the proposal, this rate would increase from 37% to 39.6%, returning to the level before 2017, reports the Financial Times.

Although some Republican groups have opposed the idea, arguing that it aligns more closely with Democratic policies, Trump is trying to convince his party colleagues that higher taxes for the wealthiest are necessary to cover the costs of extensive middle-class tax cuts and to protect aid programmes like Medicaid.

"This is Kamala Harris's proposal," claims the organisation Americans for Tax Reform, which opposes any tax hikes.

As part of a comprehensive fiscal package, Trump is also considering ending the preferential treatment of hedge fund and private equity gains (known as carried interest), which is sure to meet resistance from Wall Street.

Besides the controversial proposals regarding taxes on the wealthiest, Trump's administration is also working on amendments related to the so-called SALT tax, which is the cap on deductions from state and local taxes. The current cap is £8,000, but the new package proposal could raise it to £24,000, providing tax relief to wealthy U.S. residents.

Trump's controversial proposal opens new ground for negotiation within the Republican Party. Although a tax hike for the wealthiest might be a challenging topic to accept in a traditionally pro-growth, low-tax party, the Financial Times emphasises that its implementation could be part of the president's broader political strategy.