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A debate over how much America's wealthiest households should pay in taxes has emerged as one of the key sticking points in the negotiations between the White House and Republicans on Capitol Hill over rewriting the nation's tax code.
The administration and Republican leadership are slated to jointly release their framework for tax reform Wednesday, but there is still no final agreement on the substance of the plan or how much of it to reveal, according to several people familiar with the talks. The White House has been pushing to lower the top individual tax rate from 39.6 percent to 35 percent, those people said. But not all of the so-called Big Six — Treasury Secretary Steven Mnuchin, National Economic Council Director Gary Cohn and top Republicans in the House and Senate — are on board with a plan that lowers the effective tax burden of the richest Americans.
Cutting taxes on the wealthy would also run counter to President Donald Trump's own statements made as recently as this month. Trump has touted the tax plan as a boon to working-class families and promised that the wealthy would not be the big winners. He is slated to unveil the tax framework negotiated by the Big Six in a speech in Indiana on Wednesday.
"This is not to benefit the wealthy," Trump said earlier this month while in Florida surveying damage from Hurricane Irma. "This is to benefit the middle class and to benefit companies, where they're going to be producing jobs."
Treasury Secretary Steven Mnuchin told CNBC in November that there would be no "absolute tax cut" for the rich under the administration's proposal. During congressional hearings, lawmakers even dubbed the statement the "Mnuchin rule."
But speaking on CNN on Sunday, Mnuchin backed away from that claim.
"It was was never a promise. It was never a pledge," he said.
A plan that lowers the top tax rate could complicate the administration's efforts to woo red-state Democratic senators as well. All but three of the chamber's Democratic members have pledged to oppose any tax proposal that cuts taxes for the wealthy.
"If Republicans push a tax bill to please their hard-right wealthy contributors, instead of working from the middle, they will have the same trouble with taxes that they're having with health care," Senate Minority Leader Chuck Schumer said in a statement. "We urge our Republican colleagues to pursue a mainstream tax reform package, rather than partisan tax cuts demanded by their donors."
In an interview with CNBC on Monday, House Ways and Means Chairman Kevin Brady said negotiations were going well and that he expected the announcement on Wednesday to include specific rates. Brady, a member of the Big Six, did not offer additional details of what the top individual rate would be, but in the past, he has advocated a plan that lowers the tax burden for all households.
Senate Finance Committee Chairman Orrin Hatch of Utah, another Big Six member, defended Republicans' efforts so far during a committee hearing earlier this month.
"While I can't see into the hearts of every member of Congress, I truly don't know of a single Republican who, when thinking about tax reform, asks themselves what they can do to help rich people," Hatch said. "That has never been our focus, and it is not our focus now."