The House Republicans introduced an expansive tax relief proposal on Monday, marking a significant legislative move aligned with President Donald Trumpโs priorities. This initiative is projected to incur a cost of approximately $4.9 trillion, funded in part by reductions in Medicaid, food stamps, and various green energy programs utilized by millions of Americans.
The tax package, interestingly titled โTHE ONE, BIG, BEAUTIFUL BILLโ in homage to Trump, aims to perpetuate tax reductions established during his initial term. It plans to enhance standard deductions, child tax credits, and estate tax exemptions while introducing new tax incentives for tipped wages, overtime compensation, Social Security benefits, and auto loansโall of which were part of Trumpโs campaign promises.
Thereโs a proposal to triple the state and local tax deduction (SALT) cap from $10,000 to $30,000 for couples, which faced immediate opposition from certain GOP legislators in high-tax states like New York and California. Additionally, private universities, particularly within the Ivy League, would face a considerable new tax on endowments, potentially as high as 21%. Furthermore, a notable provision seeks to revoke the tax-exempt status of organizations deemed supportive of โterroristsโ by the State Department, raising concerns among civil society advocates about its potential misuse against Trump administration opponents.
The unveiling of this package has ignited a major political debate on taxes, spending, and national priorities akin to the discussions of 2017 when the GOP successfully enacted the Trump tax cuts yet failed to dismantle the Affordable Care Act (Obamacare). Initial cost projections are expected to escalate as discussions progress.
In a social media statement, Trump urged Republicans to unite behind this effort, hinting at further collaboration upon his return from a Middle Eastern trip. However, Senator Josh Hawley of Missouri cautioned against impairing Medicaid, arguing that itโs unjust and a political misstep for working-class Americans.
Monday saw the House Agriculture Committee unveil its plans to cut $290 billion from federal nutrition programs, partly by reallocating costs to states and mandating work requirements for able-bodied adults up to 64, to access food aid.
With a Memorial Day target set by House Speaker Mike Johnson, Republicans are orchestrating a series of day-and-night public hearings aimed at amalgamating various elements into a cohesive legislative package. Despite uncertainty, a report from the bipartisan Joint Committee on Taxation on Monday suggested that tax breaks would initially reduce revenue by $4.9 trillion over the next decade, even prior to incorporating Trumpโs latest tax incentives.
Concerned about ballooning costs, Texas Representative Chip Roy of the House Freedom Caucus voiced worries about the potential of escalating the deficit and debt to $20 trillion, pressing for a contingency plan.
Behind closed doors, Republicans are refining the tax legislation, which spans 389 pages. Key features include a $2,000 increase in the standard deduction, rising to $32,000 per household, and an additional $500 child tax credit implemented over four years. A new condition focuses on restricting undocumented immigrants from accessing this credit, predicted to impact 4.5 million U.S. citizen children, according to a liberal think tank.
An increased estate tax exemption from $14 million to $15 million, with inflation indexing, is also proposed. A no-tax policy on tips is part of Trumpโs commitments, providing service industry workers with deductions. For vehicle consumers, a temporary car loan interest deduction of up to $10,000 is available, limited to U.S.-assembled vehicles, expiring by the end of Trumpโs office term. Another component is a $4,000 deduction on Social Security income for qualifying seniors.
However, the SALT deduction, which features prominently, is still under refinement. The proposal raises the SALT cap to $15,000 for single filers and $30,000 for couples, introducing reductions for those with higher incomes.
In a parallel development, some House Republicans conveyed opposition to Medicaid cuts, which provide healthcare to approximately 70 million Americans, and to rescinding green energy tax breaks crucial for new renewable projects.
Eleven House committees compile different sections seeking at least $1.5 trillion in savings to sustain the 2017 tax cuts due to expire soon. The Agriculture Committee recommends reducing the Supplemental Nutrition Assistance Program (SNAP) through increased work stipulations, limited future expansion, and shared cost responsibilities with states.
This proposal mandates employment for parents of children older than 7 to access aid, a modification from the previous 18-year stipulation, and restricts waiver accessibility to regions with unemployment over 10%. There are objections to mandatory state cost-sharing as of 2028.
Simultaneously, $60 billion would be allocated to bolster agriculture programs in aid of farmers. On Sunday, the Energy and Commerce Committee revealed the centerpiece of their cost-cutting strategy: at least $880 billion from Medicaid to finance tax breaks.
Though Republicans defend these measures as targeting inefficiencies, Democrats caution against inevitable coverage losses, predicting millions could be affected. The proposals entail new Medicaid โcommunity engagementโ requirements, demanding at least 80 hours monthly of work or education for qualified adults, with dual annual eligibility verifications rather than a single check.
Significant reductions are aimed at green energy tax incentives, rolling back Biden-era climate strategies.