Trump signs off on 25 percent tariffs for Mexico and Canada, 10 percent for China. Over the weekend, President Trump followed through on his campaign promise to impose levies on three of the country’s biggest trading partners. Trump’s order calls for a lower tax on Canadian energy imports, which will be subject to a 10 percent tariff. Mexico and Canada have already announced plans for retaliatory tariffs on American imports.
New tariffs could cost reduce consumers’ average after-tax income by 1 percent. Just ahead of the announcement, TPC analyzed how 25 percent tariffs on imports from Canada and Mexico could impact taxpayers and federal coffers. Over ten years, blanket tariffs on the two nations would generate over $1 trillion in federal revenue, but would also reduce after-tax incomes for Americans. Lower-income households could see a smaller decline (about $170 in a year) while higher-income groups would face steeper losses ($3,280 in a year). In the long-term, revenue would taper off as businesses and consumers shift to alternative suppliers and markets.
Lawmakers consider taxing workplace perks to fund tax cuts. CNBC reports on Republican lawmakers’ search for ways to offset the cost of extending provisions of the 2017 Tax Cuts and Jobs Act. Taxing fringe benefits like employer-provided transportation, meals, and gym memberships is on the table. Republicans estimate these changes could generate about $157 billion in revenue over ten years.
OIRA review for tax regulations reinstated. TaxNotes reports (paywall) on President Trump’s Jan. 31 executive order requiring the Office of Information and Regulatory Affairs (OIRA) to review tax regulations, a process that was halted during the Biden administration. The directive also escalates regulatory rollbacks, requiring ten rules to be eliminated for every new rule enacted. Supporters argue the measure increases transparency; critics warn it could disrupt the IRS’s ability to issue timely and effective tax guidance.
Taxpayers could have a difficult tax filing season. TPC’s Howard Gleckman examines the mounting challenges facing the IRS, including the potential for staffing reductions, hiring freezes, and leadership transitions. The potential loss of experienced workers due to proposed federal worker buyouts and job uncertainty could impact taxpayer assistance, return processing, and IT security.
India’s taxpayers could see relief. The Indian government presented a budget to its parliament over the weekend. The budget includes tax cuts for middle-income earners to boost their spending power, including raising the threshold of taxable income from $8,074 to $14,800. A new income tax bill is expected to be released next week.
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