Trump retreats on comments on raising taxes on the wealthy

WASHINGTON (Reuters) - Republican presidential candidate Donald Trump backtracked on Monday on his remarks about raising taxes on wealthy Americans, saying the rich might simply get a smaller tax cut than he originally proposed.

Trump walked away from his Sunday comment that taxes on the wealthy would "go up" once his broad tax policy proposals, which include tax cuts for rich Americans, were negotiated with Congress. That appeared to be a break with traditional Republican support for lower taxes in all income brackets.

On Monday, Trump said he did not mean to imply he was willing to raise taxes for people in higher-income brackets from their current level, but was referring to potential adjustments to his own tax policy proposal.

"I may have to increase it on the wealthy - I'm not going to allow it to be increased on the middle class," Trump said on CNN. "Now, if I increase it on the wealthy, that means they're still going to be paying less than they are paying now. I'm talking about increasing it from my (original) tax proposal."

The proposal, released in September, included broad tax breaks for businesses and households, with the highest income tax rate cut to 25 percent from the current 39.6 percent.

Trump, a billionaire real estate developer, said on Monday that lowering taxes on the middle class and businesses was his priority.

"I'm not talking about a tax increase. I'm talking about a tremendous tax decrease, OK?" Trump said on the Fox Business Network. He said proposals always changed in negotiations with Congress but that he was committed to cutting taxes.

The contradictory statements came as Trump began pivoting to a general election race against likely Democratic nominee Hillary Clinton. Trump effectively clinched the Republican nomination for the Nov. 8 presidential election last week after his last two rivals dropped out of the race.

Douglas Holtz-Eakin, a former Bush administration official who also advised Republican John McCain during his failed 2008 presidential run, said Trump was trying to make his economic plans add up.

'IMPENETRABLE'

"He’s gone from wildly unrealistic to impenetrable" on the subject of taxes, Holtz-Eakin said, adding that Trump's comments about the outcome of possible negotiations with Congress "makes me confused as to what he really wants."

Trump did win support from influential anti-tax crusader Grover Norquist, who said on CNBC on Monday that some people with a lot of tax credits might see some increase, but that rates would drop overall under Trump's plan.

"He's made it very clear he wants lower taxes," Norquist said. "Trump's tax cut would be a tax cut for every American."

Norquist's group, Americans for Tax Reform, asks all Republican candidates to sign a no-new-taxes pledge, but Trump has not signed one yet. Norquist said he was confident the candidate would sign, given his public comments.

The Clinton campaign was happy to take Trump at his word that he planned to cut wealthy Americans' taxes. It cited an analysis of Trump's proposal by the nonpartisan Tax Policy Center estimating it would give the wealthiest Americans an average annual boost of more than $1.3 million a year.

"This is a tax plan by the billionaire for the billionaires,” Clinton adviser Jake Sullivan said. “And after some confusing comments over the weekend, he actually doubled down today on the fact that his tax plan would have massive cuts for the wealthy. Who knows what he'll say tomorrow?"

Trump also sought on Monday to clarify comments he made last week about the U.S. debt. He said he never espoused restructuring or defaulting on government debt but would buy it back at a discount if interest rates go up.

"He should stop talking about the debt because he hasn’t said anything that makes any sense yet," Holtz-Eakin said.

Trump's candidacy has opened a rift in the Republican Party, with many leaders appalled by his rhetoric on immigrants, Muslims and women and concerned that some policy positions such as his opposition to free trade run counter to Republican orthodoxy.

U.S. House of Representatives Speaker Paul Ryan, who said last week he was not yet ready to endorse Trump, said on Monday he would step down as co-chairman of the July 18-21 Republican National Convention if Trump wants him to. Trump on Sunday did not rule out pushing Ryan out from the speaker's traditional role as convention chairman.

Ryan and Trump will meet on Thursday to try to iron out their differences. Later on Thursday, the candidate will meet with Senate Majority Leader Mitch McConnell and other members of the Senate Republican leadership, a Senate Republican aide said on Monday.

Trump said on Monday that New Jersey Governor Chris Christie, a former presidential rival who endorsed his candidacy shortly after dropping out of the race, would lead his White House transition team.

Republican U.S. Senator Marco Rubio of Florida, another vanquished presidential rival, sought on Monday to quash speculation he might emerge as the vice presidential running mate for Trump, saying he still had deep reservations about the former reality television star.

(Additional reporting by Susan Cornwell; Writing by John Whitesides; Editing by Jonathan Oatis and Peter Cooney)