Trump is pushing for a new tax bracket $2.5 million and 39.6% tax rate.
Surprised the tax rate isn’t higher.
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It’s a return to the pre-taxcut rate but only for top bracket. To fund middle class tax cuts such as tax free overtime, tips, and Social Security payments.
And the number has been increased from $1MM to $2.5MM. And might be negotiable.
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They will bring in lots of loopholes, to begin with, If you are a small business owner, then your income is exempted.
This is not to raise revenue, rather cushion the news that extending trump tax cuts going to cost over $8 T.
Personally I think economy is doing good, and we should let the tax credits expire and rein in debt a bit before making changes… but I have only one vote 
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I recall that before 2018, the 39.6% tax rate applied to income slightly above the $400,000 level.
In 2018, the highest bracket tax rate was cut down to 37%.
this new bracket has increased that tax rate back up to 39.6% but it is applied to much higher income than before 2018. Maybe the only people who will see a change are people who make more than 2.5 millions?
That is pretty much guaranteed, based on past practice. Anyone making $2.5M/year, in W2 wages? I happen to have the 2024 United Health proxy in hand. The CEO’s compensation for 2024 totaled $26,339,215. His cash salary was $1.5M He also received a cash incentive of $1.5M. The rest was stock, and services, like security and tax preparation. I am sure the executive pay plan will be “reformed”, to put cash income below $2.5M.
No-one, except maybe professional sports players, will pay that $2.5M bracket.
Steve
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It isn’t close to being enough.
The new tax bracket would raise about $59.3 billion over a decade, according to the Tax Foundation. And it would affect between 150,000 and 200,000 households.
The estimated lost revenue from taxes on social security (over $1 in a decade) alone is 20x that much.
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Stock, RSU, options runs through W2. If they want to raise revenue, make dividend, interest, and long term capital gains as regular income (perhaps with some reasonable exemption for retirees who are relying on them for income).
This is where you can meaningfully raise revenue and take away the benefits of billionaires.
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Until the tax code is “reformed”.
Steve
When you exercise stock options (NQSO), the “bargain element” is considered to be W-2 income. So if the option has a strike price of $200, and the stock is $380, then that $180 difference per share is considered W-2 income upon exercise.
Dear Kingran,
Those are pejoratives, exempt and loopholes.
Things can be expensed. We want that. Invest in American business, R&D, and labor. Go for it. We love it. Make America richer.
The higher taxes go the more the wealthy invest. Love it.
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Plenty of business executives especially CEOs make those numbers. Tricky part is how are capital gains counted. Sale of business or farm can easily create numbers like that but usually capital gains. And there is the carried interest problem causing earnings to be counted as capital gains.
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Does anyone think TIG will raise the taxes on his cronies, or himself?
Steve
Those who make over $2.5MM are clever at finding those loop holes. They can afford to hire the experts.
They are clever at hiring lobbysts to block passage too. But perhaps deals can be made to keep the right loop holes. Then its like the magician pulling rabbits out of the hat. Big news abt higher taxes, the pain of paying them, and the unfairness of it all. Coupled with loop holes so they don’t actually have to pay them. Very clever.
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Perhaps they will. It is the only thing that makes sense.
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