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U.S. president Donald Trump is working with lawmakers in an attempt to solidify the GOP’s tax plan prior to Memorial Day.
Treasury secretary Scott Bessent met with House and Senate tax chiefs – as well as House speaker Mike Johnson and Senate majority leader John Thune – in the hopes of reconciling the two chambers’ competing visions, as well as disparate interests among GOP legislators in both chambers.
Trump promised a number of tax cuts on the campaign trail – including the extension of his 2017 tax cuts and the implementation of new tax breaks for tipped wages, auto loans and domestic manufacturing.
While Trump enjoys broad support for these policies among his party, legislators tasked with drafting the tax bill must contend with still unclear costs for other components of Trump’s “Big Beautiful” agenda, which proposes hundreds of billions of dollars of additional expenditures on national security and border security, as well as for oil and gas production.
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The GOP’s $4.5 trillion tax cut plan hinges on $2 trillion dollars worth of spending cuts – which the chairs of various House and Senate committees have been tasked with identifying and presenting to leadership. Until tax code authors know exactly how much will be cut – and therefore how much tax relief they can afford – attempts to draft the details of legislation are near impossible. Still, some legislative leaders are projecting optimism that final bill language will be ready soon.
“We’re days away, not months away, from delivering this for the American people,” House ways and means committee chairman Jason Smith said on NewsNation.
Republican committee member Darin LaHood gave Politico a different message, telling the publication the committee “may not vote until early June.”
Given the ambitious goals of GOP legislators to restore tax incentives for business equipment purchases and research and development – compounded by Trump’s desire to implement tax cuts for seniors and those making overtime pay – it could be difficult for GOP leaders to rapidly reach an agreement.
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Lawmakers have considered numerous options to offset the costs of new tax deductions including increasing the tax rate for university endowments and limiting business write-offs for executive pay and state and local taxes.
While reducing state and local tax (SALT) deductions are on the table for businesses, multiple GOP lawmakers are fiercely advocating that they be increased for individual taxpayers.
Trump’s 2017 reduction of the SALT deduction punished taxpayers in high income tax states by capping their federal income tax deduction to $10,000.
Former Democrat governor Andrew Cuomo of New York called the cap “an economic civil war” which he warned “encourages high-income New Yorkers to move to other states.”
While millions of residents of high income tax states have fled since the 2017 “Tax Cuts and Jobs Act” capped the deduction, those same states’ affinity for tyranny in response to the Covid-19 pandemic makes it difficult to ascribe the population outflows solely to tax policy.
Be that as it may, many Republican representatives in high-tax states are threatening to withdraw support for the GOP tax plan unless SALT deduction limits are raised.
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“The 2017 Trump tax bill delivered real national benefits, but the cap on SALT deductions left high-tax states like New York with a smaller share of those gains,” New York Republican representative Nick LaLota said in a Facebook post, adding that the “political landscape has shifted.”
“Our party needs the support of blue state Republicans like me to advance any reconciliation bill,” he added. “My ask is straightforward: a fair and reasonable increase in the SALT cap. This is about equity, common sense—and the votes to get it done.”
A study by the nonpartisan Tax Policy Center found that repeal of Trump’s 2017 policy “would cut 2025 taxes by an average of more than $140,000 for the highest-income 0.1 percent of families but provide little or no help to low- and middle-income households.”
Trump himself claimed to be in favor of this change on the campaign trail, telling supporters “I will turn it around, get SALT back, lower your taxes and so much more.”
Despite his apparent eagerness to entertain this concession to wealthy blue state taxpayers, members of Trump’s own team indicated a willingness to radically depart from decades-long GOP tradition of lowering taxes for high income-earners, with vice president JD Vance and budget director Russell Vought reportedly considering raising taxes for those making more than $1 million per year.
While the move appears to be dead on arrival on Capitol Hill, MAGA heir-apparent Vance’s consideration of the policy is indicative of the GOP’s shift towards populist ideology.
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“Politically, it’s game, set, match — it’s a no-brainer,” said Stephen K. Bannon, who served as Trump’s chief strategist during his first term. “This would destroy the Democrats.”
Bannon argued such a policy would kneecap the progressive wing of the Democrat party – which is the only vestige showing signs of life in the wake of the 2024 election, with progressive senator Bernie Sanders crowning representative Alexandria Ocasio-Cortez heir to his powerful political movement at a series of well-attended political rallies in kew swing states.
“This guts the AOC-Bernie ‘oligarchy tour,’” Bannon said.
While this policy change is unlikely to appeal to the authors of the current budget, should Vance and other MAGA leaders continue to warm to the idea, the GOP’s decades-long push for reduced income taxes for high-income earners could become a policy of yesteryear as the nation and party grapple with ways to continue providing government services amid an ever expanding debt crisis.
Count on FITSNews for updates as federal legislators continue to hash out the details of America’s tax policy.
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ABOUT THE AUTHOR …
(Via: Travis Bell)
Dylan Nolan is the director of special projects at FITSNews. He graduated from the Darla Moore school of business in 2021 with an accounting degree. Got a tip or story idea for Dylan? Email him here. You can also engage him socially @DNolan2000.
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3 comments
I honestly believe that taxes in this day and time, are nothing more than a tool to keep as many serfs as possible from succeeding or prospering in any meaningful or durable way. It enables the filthy rich to gain more of whatever; be it property, stocks, money, etc. It keeps the serf classes from obtaining a lot of those things, meaning more available to the filthy rich.
Of all the people I know from differing walks of life, including self-employed and small business owners, I have only run across one who told me they actually benefited from those “big” Trumpian tax cuts from his first term. Everyone else, myself included, noticed no remarkable improvement. GovCo prints money with no tangible backing out of thin air, all the time. Why do they need to steal from us if my theory above is not correct?
I am, by no means, filthy rich, and I benefitted from the TCJA. Specifically from the Qualified Business Income Deduction that is available for self employment income, which puts the taxation of that income on a more level playing field when compared to corporations. I have a full time job and a side business for extra income. The QBID allows me to deduct 20% of the income from the side business. At my middle class income levels, that’s meaningful.
The “tax plan” is, and has always been, tax cuts for billionaires and corporations.