America’s wealthy face 44pc supertax to help middle class

AMERICANS earning more than $5 million (£3.8million) a year could face a new 44 per cent tax rate, under a proposal reportedly being promoted by an influential White House adviser.

Steve Bannon, a former Goldman Sachs banker who is now the chief strategist for Donald Trump, is said to be pressing for the higher tax rate to provide tax cuts for lower earners.

Three White House sources told online news site The Intercept that Mr Bannon was behind the plan, which would increase the top rate from 39.6 per cent.

The president has made tax reform one of his priorities, campaigning on a promise to simplify America’s byzantine system.

A previous plan he floated reduced the number of tax brackets from seven to three, and reduced the top tax rate to 35 per cent.

A 44 per cent level, however, is close to that proposed by Mr Trump’s presidential rival, Hillary Clinton.

It is something Mr Trump could well be considering. “I have wealthy friends that say to me, ‘I don’t mind paying more tax’,” the president said on Tuesday

in an interview with The Wall Street Journal.

“The truth is the people I care most about are the middle-income people in this country who have gotten screwed. And if there’s upward revision it’s going to be on high-income people.”

Sarah Huckabee Sanders, the White House spokesman, said a day later that further details would be released shortly. “We’re focused on the three big priorities of the tax reform: a simple, fair tax code, middle-class relief, and creating jobs,” she said.

“I think the president is looking and prioritising middle-class tax relief. He’s made no secret about that. That’s one of the biggest priorities of the three things that he’s focused on when it comes to tax reform.”

That the plan comes from Mr Bannon, a self-described “economic nationalist” who headed the populist conservative website Breitbart, is no surprise.

When the broad outline of the tax hike was reported earlier, Breitbart covered it favourably.

But the increase of tax on the rich, which would bring in $18 billion (£13.7billion), would face stiff opposition from congressional Republicans.

Just over 43,000 people filed tax returns for the year 2014 claiming income of at least $5million, according to the Internal Revenue Service. Their payments accounted for $600 billion (£450billion) in tax, or 8.8 per cent of the total taxes paid.

The new rate would only apply to about a third of that money, as the 44 per cent applies at the $5 million level.