Michigan braces for Canada tariffs. President Trump’s escalating trade fight with Canada is raising economic and political concerns in Michigan, where s about $1 billion in goods crosses daily between Detroit and Windsor, Ontario. Trump imposed 50 percent tariffs on Canadian goods last week. Canada plans retaliatory tariffs on goods worth $20 billion on Sept. 8.
Why do OBBBA tax impacts vary by race and ethnicity? TPC’s Aravind Boddupalli explains that income differences explain most, but not all, of the variation in how White, Black, and Hispanic households benefit from the One Big Beautiful Bill Act (OBBBA). TPC finds that after adjusting for differences in income distribution, the racial and ethnic gap in OBBBA’s tax impacts falls from nearly 50 percent to less than 5 percent. But within income groups, differences remain. Black and Hispanic households in the bottom two income quintiles receive larger average tax cuts than White households, largely because Black and Hispanic households are more likely to have children. Among the highest-income 5 percent of households, White households receive larger average gains, largely because they report more business income eligible for the qualified business income deduction.
A proposed EITC expansion would help families with and without children. TPC’s Margot Crandall-Hollick and former TPC intern Zach Sarver explain how the Tax Cut for Workers Act would expand the earned income tax credit, especially for workers without children. The bill, introduced by Sen. Catherine Cortez Masto (D-NV) and Rep. Dwight Evans (D-PA), would more than double the maximum childless EITC from $664 to $1,502 and expand eligibility to younger and older workers. TPC estimates the bill would deliver $140 billion in benefits from fiscal years 2026 to 2035, with about 27 million taxpayers receiving an average benefit of almost $450 in 2026. The bill also would make the EITC’s inflation adjustment more generous by returning to the CPI-U instead of the chained CPI, a change TPC estimates would cost $60 billion over ten years.
Expiration of the expanded CTC contributed to economic pessimism. Jacob Bastian reports on research findings that the expiration of the expanded 2021 child tax credit (CTC) reduced income for families with children and made them more pessimistic about the economy. For each $1,000 in lost CTC benefits, consumer sentiment declined by about 1.7 points, or 2.4 percent, with the largest declines among lower-income families with three or more children. Those effects persisted through 2024 and extended beyond households’ views of their own finances to their views of the broader economy and government policy.
NYC narrows pied-à-terre tax notices. New York City Mayor Zohran Mamdani is narrowing the pool of homeowners who may have to pay the city’s new pied-à-terre tax and extending the deadline for challenges to Oct. 6. The city initially sent letters to about 17,000 to 18,000 homeowners who might owe the surcharge on second homes valued above $5 million and co-ops and condos valued above $1 million. New letters are going to a smaller pool of 10,800. The change comes as the rollout faces a lawsuit from homeowners who say they are full-time city residents and should not be subject to the tax.
Sweden’s wealthy weigh exit as tax proposals gain momentum. Bloomberg reports (paywall) that some wealthy Swedes are considering moving assets or leaving the country as wealth tax proposals gain momentum in the lead up to next month’s general election. Sweden’s Left Party is campaigning for a billionaire tax and says it may need to be paired with an exit tax, while the Green Party also favors higher taxes on the richest households. Social Democrat leader Magdalena Andersson has so far rejected reviving Sweden’s earlier wealth, inheritance, and gift taxes.
Itemized: Fact of the Week. TPC estimates that 3 percent of taxpayers benefit from the tips deduction, with an average tax reduction of about $1,480 among those who benefit, and that 10 percent of taxpayers benefit from the overtime deduction, with an average tax reduction of about $1,200. More than 90 percent of taxpayers in the bottom 40 percent of the income distribution do not benefit from either provision.
The Daily Deduction will post weekly until Congress returns to session after Labor Day.
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