President Donald Trump has achieved significant success in the House GOP’s newly unveiled tax legislation, which includes several of the tax breaks he had previously called for. However, the bill does not entirely align with his broader economic agenda, as some of his key demands have been left out or modified to fit fiscal constraints. The legislation, which was unveiled by the House tax-writing committee and set for debate on Tuesday, delivers on Trump’s promise to make many of the 2017 tax cuts permanent, a move that was a core demand of his campaign and was supported by some of his Republican allies. Additionally, Trump got his request for a deduction for the interest paid on auto loans and the limits on deductions for the purchase of sports teams, both of which had been part of his tax agenda.
Another prominent feature of the bill is the placeholder for the state and local tax (SALT) deduction, which Trump had heavily promoted as a measure to restore benefits for blue-state Republicans. However, the exact implementation of this provision remains under discussion. The new legislation also introduces a tax-preferred savings plan for children under the age of eight, known as the “MAGA account,” which is seen as an attempt to appeal to Trump’s populist base and provide a financial incentive for families. Furthermore, the bill includes a $4 trillion debt ceiling increase, a measure Trump had emphasized as vital to prevent a potential default on the U.S. debt.
Despite these victories, the bill does not fulfill all of Trump’s demands, particularly in relation to the carried interest loophole and the potential for higher taxes on the wealthiest Americans. Trump had previously expressed a desire to eliminate the carried interest loophole, which allows certain financial professionals to pay a lower tax rate on their income. However, the legislation does not include this change, which has been a point of contention among some Republicans and financial analysts. Additionally, the bill avoids including a tax increase on the highest-earning Americans, which the administration had considered as an option but was not ultimately included.
The compromises in the bill have raised concerns among deficit hawks and some conservative lawmakers, who argue that the legislation does not adequately address the long-term fiscal implications of the tax cuts. For instance, the benefits offered for tips, seniors, and overtime work are limited to four years and come with income restrictions, a decision made to ensure the bill’s fiscal sustainability. Rep. Chip Roy (R-Texas) criticized the bill for its potential to add over $20 trillion in debt within a decade, with many of the spending cuts occurring after Trump’s presidency. These financial concerns have added complexity to the bill’s approval process, particularly within the GOP-controlled House.
As its path through the House continues, the legislation is expected to face further debate and potential changes, especially as it moves to the Senate, where additional tax breaks could be added or some provisions might be pared down. Senators like John Cornyn (R-Texas) have expressed caution, stating that they would wait for the House to finalize the bill before determining any further adjustments. Trump’s top economic adviser, Kevin Hassett, described the legislation as “a great first step,” highlighting that it sets a strong foundation for further discussion. Nevertheless, the final form of the bill and its long-term impact on the U.S. economy and budget remain uncertain, with ongoing debates about how best to balance Trump’s economic goals with fiscal responsibility.