#TrumpTaxCuts

The Trump tax cuts refer to the Tax Cuts and Jobs Act (TCJA), signed in December 2017, overhauling the U.S. tax code for individuals, businesses, and estates.

Key Provisions:

- Individuals: Lowered tax rates (top rate 39.6% to 37%), doubled standard deduction, eliminated personal exemptions, increased Child Tax Credit to $2,000, capped SALT deduction at $10,000, limited mortgage interest deduction to $750,000 debt. Most expire post-2025.

- Businesses: Cut corporate tax from 35% to 21% (permanent), 20% QBI deduction for pass-throughs (expires 2025), 100% bonus depreciation (40% in 2025).

- Estates: Doubled estate tax exemption (~$14.3M in 2026 if expired), expires 2025.

Impacts:

- Economy: Short-term GDP boost (3.3–3.8%), long-term 2.6–3.2% if extended, wages up $2,100–$3,300, 4.1–6M jobs saved. Critics say growth faded, little trickle-down.

- Fiscal: Cost $1.9T (2018–2028). Extending cuts could add $4–$5T to deficits by 2034, $9.1T with interest. Debt could hit 211% of GDP by 2054.

- Distribution: All incomes benefited; top 1% gained ~$60,000–$314,000, bottom 60% ~$400–$500. Middle-income tax hike ($1,695) if cuts expire.

2025 Proposals:

- Extend TCJA: Costs ~$4.5T. New cuts: no taxes on tips, overtime, Social Security (~$2.3T), remove SALT cap ($1.2T), auto loan interest deduction, corporate tax to 15% for U.S. goods.

- Tariffs: 10–20% on imports (60% on China) to offset costs, risks higher prices.

- Process: Budget reconciliation for simple majority. House passed $4.5T tax cut resolution (Feb 2025); Senate adopted $5.3T version (Apr 2025).

- Opposition: Democrats want high-income cuts to expire, corporate tax to 28%, wealth taxes. Some Republicans resist rate hikes.

Challenges:

- Funding via $1.5–$2T spending cuts (e.g., Medicaid, SNAP) may hurt low-income groups.

- Tariffs could raise prices, spark trade wars.

- Narrow GOP majorities and fiscal hawks may limit cuts.

- Risks inflation, debt growth ($36T).