When President Donald Trump’s chief strategist Steve Bannon internally floated a large tax hike on the wealthy, it was not met with the nervousness or fear you might expect from would-be opponents.
Instead, they laughed.
The idea received wide media attention and dominated tax policy conversations in Washington, D.C., this week, given the sway that Bannon has in the West Wing, and how thoroughly his idea broke with partisan orthodoxy. But fiscal hawks greeted the proposal with a collective yawn—some even openly mocking the idea—and other senior White House officials concede that it’s likely going nowhere fast.
ADVERTISEMENT
Over the weekend, Axios reported that Bannon had been advocating a rate hike for the top income tax bracket in order to pay for huge tax cuts for the lower and middle class. “Bannon has told colleagues he wants the top income tax bracket to ‘have a 4 in front of it,’” according to Axios.
Ordinarily, if the chief strategist of a Republican-held White House had pushed hard for this policy idea, conservative activists would likely panic and start demanding privately that the White House take a step back from the populist ledge. Bannon has steered White House policy in other high-profile areas such as trade and immigration.
However, among Bannon’s West Wing colleagues, as well as conservative and libertarian groups working closely with the administration on tax policy, it was little more than the White House chief strategist engaging in his own political fan-fic.
“This has not come up,” said Jason Pye, vice president for legislative affairs at the libertarian group FreedomWorks, which opposes all income tax hikes. Pye said the group has been in “regular contact with the White House,” but “we didn’t bring [Bannon’s tax hike proposal] up because we didn’t see it gaining any traction.”
Grover Norquist, president of the influential group Americans for Tax Reform, called the idea “a particularly cruel thing for Bannon to do” in a Monday appearance on CNN.
In an interview with The Daily Beast, Norquist added that he hadn’t seen the White House float the idea with any vigor. Bannon’s proposal “is not part of the debate at present,” he said. “I don’t see that this one has gotten any bounce or pickup.” He noted that the proposal would violate an ATR pledge to oppose tax hikes signed by hundreds of state and federal officials, including Trump.
Norquist said he hadn’t brought up the issue directly in discussions with the White House. “It’s embarrassing when you ask somebody about a very silly idea they put forward,” he said. “It’s up there with, ‘Was that you that farted?’”
Heritage Action for America, the advocacy arm of the Trump-friendly Heritage Foundation, was less colorful in its language, but also seemed confident that Bannon’s proposal wouldn’t make it into a White House tax reform package.
“The administration is committed to pro-growth tax reform, and hiking taxes is not part of that equation,” Heritage Action spokesman Dan Holler said in an email.
Some conservatives say that Bannon’s idea could make for good politics, but conceded that likely Republican opposition in Congress would make it unworkable, in large measure due to Norquist’s pledge.
“There is a political logic to raising taxes on upper income wage earners (mostly blue-state professionals!) while carving out business income,” noted Phil Kerpen, president of the conservative group American Commitment, “but it flies in the face of the ATR pledge and would be dead on arrival in House Ways and Means, so it’s hard to take this rumor seriously.”
That prominent activists and policy experts on the right would so quickly write off a proposal from Bannon, one of Trump’s closest aides, suggests the center of power in the White House on the tax issue specifically lies elsewhere—and that Bannon’s input is not coloring policy on that issue to the degree that it has on measures such as the administration’s travel bans.
The tax reform effort has been spearheaded by officials including Treasury Secretary Steven Mnuchin and Trump’s economic adviser Gary Cohn. Cohn is widely seen as a leader of the White House’s more centrist and so-called globalist faction, which has clashed with Bannon and his allies since Trump took office.
Cohn and Mnuchin floated a tax reform blueprint in April that reduced the number of income tax brackets from seven to three, with the highest paying a rate of 35 percent. It also proposed eliminating all federal income tax deductions with the exception of those on mortgage interest and charitable giving. The plan, in contrast to Bannon’s, was widely seen as benefitting upper-income taxpayers.
Neither Bannon nor the White House press office would comment on this story. But White House sources confirmed to The Daily Beast that this is something Bannon has been advocating internally for months—and it’s a plan that many of Bannon’s colleagues see as a total dead-ender that’ll stay relegated to his populist-nationalist wish list.
“[Bannon] says a lot of things,” one White House official said. “I don’t think he even thinks this will ever happen [in this administration].”
