The Trump administration is weighing an unexpected approach to deliver on campaign promises: allowing tax rates for the wealthiest Americans to rise in exchange for cutting taxes on tips, according to a senior White House official who spoke with Axios.
Some officials within the White House believe that letting income taxes increase for top earners could create room to advance other priorities and potentially soften Democratic attacks as Republicans push to extend Trump’s 2017 tax cuts. The conversations are still early-stage, and no final decisions have been made.
Currently, the top federal income tax rate is 37%, applying to income above $609,351 for individuals and $731,201 for married couples. If the 2017 tax law expires, the top rate would revert to 39.6%, and the income thresholds would drop, affecting more high earners. While only about 1% of taxpayers fall into this bracket, they contribute a substantial share of income tax revenue.
Allowing the top rate to rise could unlock revenue under budget reconciliation rules—giving Republicans flexibility to pursue Trump’s more populist goals, such as eliminating taxes on tips, which would particularly benefit service industry workers.
The strategy could also shift the political narrative. Democrats have often accused Republicans of cutting essential services like Medicaid while offering tax breaks to the wealthy. One White House official bluntly warned, “If we renew tax cuts for the rich paid for by throwing people off Medicaid, we’re gonna get f--king slaughtered.”
As Trump’s GOP continues to align itself with working-class voters, the political downside of raising taxes on the rich is seen as minimal compared to the upside of delivering targeted tax relief for service workers. Public polling shows a majority of Americans—and even a significant portion of Republicans—support higher taxes on the wealthy.
