US FISCAL: Trump Tax Priorities Takes Shape With House Leadership Meeting
President Trump has laid out his tax priorities with Republican House Representatives, per multiple news outlets citing the White House press secretary. They are:
- Renewing the TCJA tax cuts
- Eliminating tax on tips, Social Security, and overtime pay
- Cutting taxes on products that are made in the US
- Adjusting the SALT (state and local tax) cap
- Eliminating tax breaks for sports team owners
- Closing the "carried interest" loophole
There are plenty of details yet to be seen about several of these propositions, but Trump's biggest tax cut proposals in the campaign had been the first three (TCJA, various tax eliminations, corporate tax cuts for domestic producers), which over 10 years would cost $6-7T ($3.4T making TCJA permanent plus potential $1T for estate/business tax cut permanence, $1.2T Soc Sec, $120B tipping income tax/$200B if also exempting payroll tax; $750B overtime tax; $360B lowering corporate rate for domestic producers to 15% - all estimates from the Tax Foundation). We assume that Trump is making the case for the TCJA cuts to be permanent though some fiscal hawks have pushed for them to be only temporary.
- The SALT adjustment is a question here, as restoration of the full deduction would cost $1T over 10 years, but one that Trump will probably need to include to get some members of Congress on board - doubling the cap for married couples would add $100-200B to the bill.
- Some items from the campaign trail are missing, for example an itemized deduction for auto loan interest, though that was "only" due to cost $60B, and it may yet be included in the final proposal.
- The main surprises here are the latter two: closing the "carried interest" loophole which applies mainly to private equity and investment managers, but would only cut the deficit by $11B over 10 years (around $1B per year) per CBO estimates, while the impact of the sports team owner tax break elimination is unclear.
- There's no word on the revenue side of the equation - particularly on tariffs - and cutting expenditure in the budget, which will be essential to closing the gap implied by the tax cuts and get the bill through the reconciliation process. Axios reported that Speaker Mike Johnson, Majority Leader Steve Scalise and Majority Whip Tom Emmer were in attendance, among others, though we haven't heard anything further.