Treasury Secretary Steven Mnuchin told listeners at The Economic Club of New York on Thursday that President Donald Trump will himself incur a tax increase due to the Republicans' proposed tax reform. "He will have a tax increase," Mnuchin said. "For people who make over $1 million in the high tax states, there will be a tax increase." This came in the hours before the expected unveiling of the GOP tax plan in the Senate.
While Trump may see his federal tax rate decline under the proposal, his total tax rate, however, including state and local taxes, could increase. Like others who earn $1 million a year in taxable income, Trum would benefit from a reduced federal tax rate, according to an analysis by the Joint Committee on Taxation. That analysis showed that the average millionaire will go from a tax rate of 32.5 percent to 29.9 percent. However, these numbers may change if the House revises the bill. Trump and other such taxpayers who live in high-tax states and localities such as New York will be hit hard by the House Republican's proposed end to state and local deductions for itemized filers.
The state and local tax deduction is effectively a subsidy from the federal government to state and local governments and is used by high-income taxpayers and taxpayers in states with high state and local taxes. In the District of Columbia, the average deduction was $15,500 in 2014, according to the Tax Policy Center. The Washington Post reported on Tuesday that Trump called his accountant to find out how he would be affected. The president told senators that day that he is a "big loser" under the plan.