Senate GOP eyes Medicaid provider tax cuts, but SALT is TBD. Senate Republicans are planning to cut the Medicaid provider tax rate states can levy to 3.5 percent in their version of the OBBBA, going beyond the House-passed version that capped the tax at 6 percent. However, the Senate Finance Committee is still working out what to do with the $10,000 cap on state and local tax (SALT) deductions. The House passed a $40,000 cap (with an income phaseout), but POLITICO reports that the Senate panel is keeping the deduction at $10,000 for now. POLITICO also detailed how the Medicaid change is already drawing backlash on Capitol Hill. Both blue and red states use the tax to draw additional federal funding for Medicaid services. But Senate Finance Committee Republicans are dealing with pressure to identify larger offsets without touching Medicare.
The “revenge tax” is alarming global businesses. As Senate Republicans continue drafting their version of the OBBBA, one provision tucked into the House-passed bill is already stirring anxiety abroad. The New York Times reports on lobbying groups urging lawmakers to soften or scrap the so-called “revenge tax,” which would impose higher US tax rates on foreign companies from countries that enforce the global minimum tax agreement or impose digital services taxes on American firms. Critics argue the measure could chill foreign investment, costing the US economy up to 700,000 jobs, and reducing GDP by $100 billion annually.
EU signals it may accept a flat 10 percent US tariff rate. The European Union (EU) is reportedly willing to accept a 10 percent flat tariff on all exports to the US, in an effort to avoid higher duties on key goods such as cars and pharmaceuticals. The Handelsblatt report, summarized by Reuters, notes that this offer comes with strings attached and is not meant to be permanent. The EU’s pitch is partly motivated by expectations that President Trump will use tariff revenue to fund tax cuts and aims to preempt broader trade friction during a sensitive moment in transatlantic relations.
Electric vehicle tax credit cuts and China curbs stall factory construction. Republican efforts to block Chinese-linked firms from accessing clean energy tax credits are freezing billions in planned investments in US battery factories. According to The New York Times, companies like Ford and AESC are delaying or halting construction of new battery facilities, citing uncertainty over the House bill’s China-related restrictions. If the $7,500 electric vehicle tax credit is repealed, researchers estimate that two-thirds of existing US battery capacity could be idled. Industry leaders warn that these changes undercut efforts to build a domestic battery sector.
Texas advances $10 billion in property tax relief, pending voter approval. Gov. Greg Abbott (R) signed legislation yesterday that offers $10 billion in property tax relief for Texans if voters approve the cuts in November. The package includes increased exemptions for homeowners, seniors, and small businesses. FOX 4 News reports the average homeowner could save about $484 annually, while seniors and disabled residents may see nearly $1,000 in annual tax reductions. The relief builds on a $22.7 billion package passed in 2023, continuing Texas’s efforts to cut property taxes at scale.
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