Framing the tax policy debate in 2025. Federal tax policy will take center stage next year, with Republican President-elect Donald Trump at the helm of a unified government. Many provisions of the Tax Cuts and Jobs Act (TCJA) are set to expire at the end of 2025. TPC’s Bill Gale and Brookings Institute’s Ian Berlin outline five issues that will shape the tax debate, leaving lawmakers with four possible scenarios.
Budget math and tax cut extensions might not mix. The New York Times reports on the $4 trillion dilemma facing Republicans: how to extend TCJA tax cuts without exacerbating the federal deficit. By traditional budget measures, preserving the cuts would be costly. But some lawmakers like Sen. Michael Crapo (R-ID), who will likely soon chair the Senate Finance Committee, argue that maintaining “current policy” should carry no fiscal cost. However, Crapo’s line of thinking could face opposition from fiscal hawks in his own party.
Louisiana swaps income tax cuts for higher sales tax. Louisiana’s Republican-led legislature approved tax cuts for personal and corporate income while raising the statewide sales tax, delivering a major win for Republican Gov. Jeff Landry. Proponents argue the changes will attract businesses, create jobs, and curb outmigration. Critics contend the reforms disproportionately benefit wealthy taxpayers and corporations, while burdening lower-income households in a state already known for its regressive tax structure.
Trudeau’s holiday tax break sparks debate over cost-of-living relief. Canadian Prime Minister Justin Trudeau unveiled a temporary two-month sales tax break on holiday goods—ranging from Christmas trees to toys and restaurant meals—to ease cost-of-living pressures. While Trudeau frames the measure as seasonal relief, Conservative Leader Pierre Poilievre dismissed it as a political stunt ahead of an impending election.
Congress is not in session. The Daily Deduction will next be published on Monday, December 2. Happy Thanksgiving!
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