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Trump GOP's Tax Plans Mean Pain for Families, Windfalls for the Wealthy
One think tank urged Congress to "create a more equitable federal tax system that raises revenue sufficient to meet the nation's needs and requires wealthy households and corporations to pay their fair share."
Feb 04, 2025
As U.S. President Donald Trump and congressional Republicans plot more tax cuts for the rich at the expense of working people, a progressive think tank on Tuesday put out a policy brief detailing how those cuts and price-hiking tariffs would deeply harm working families.
The Center on Budget and Policy Priorities brief is part of CBPP's "2025 Budget Stakes" series, which also includes documents on potential "painful cuts" for "vulnerable people" and the possible loss of health coverage, food aid, and rental assistance.
"High-income households and profitable corporations would grow even wealthier under Republican proposals for trillions of dollars in new or extended tax cuts," the new report states, "even as Republican proposals for trillions of dollars of cuts to health assistance, food assistance, and other programs would leave more children in poverty, more families without stable housing, and more people without health coverage."
"As a first step, Congress should let the 2017 tax cuts for households with high incomes expire on schedule."
"The major tax law that President Trump and a Republican-controlled Congress enacted in 2017 was heavily skewed to households with high incomes," the brief continues. "It was also expensive, costing $1.9 trillion over 10 years, according to the Congressional Budget Office's 2018 estimate. And it failed to deliver the economic gains its backers promised; studies found the benefits didn't 'trickle down' to most workers."
The current debate over taxes in Washington, D.C. is happening not only because Republicans now control the White House and both chambers of Congress, but also because key parts of the GOP's Tax Cuts and Jobs Act of 2017 expire at the end of this year.
The CBPP brief warns that extending the expiring provisions from what critics called the "GOP Tax Scam" would:
- Do relatively little for households with low or middle incomes;
- Add trillions in debt, much of it to benefit the wealthy;
- Worsen racial inequities; and
- Weaken the nation's ability to fulfill our commitments to seniors and meet national needs and challenges.
The document features a section on the Internal Revenue Service, which explains that "during the 2010s, steep budget cuts imperiled the IRS' ability to serve taxpayers and enforce the nation's tax laws. But funding from the 2022 Inflation Reduction Act is helping the IRS dramatically improve its customer service, operate the direct file mechanism so people can file their taxes directly with the IRS for free, and modernize and improve its tax enforcement efforts."
"Those efforts are already paying off in cracking down on tax cheats and ensuring that wealthy people pay more of the taxes they owe," the brief notes. "But Congress has already canceled some of the new enforcement funding, and Republican budget proposals call for repealing the rest."
Although Trump on Monday struck deals with the Canadian and Mexican governments to delay 25% tariffs on goods from the United States' neighboring nations, CBPP also sounded the alarm about Trump's campaign promises regarding the taxes.
"Research shows that the extra costs imposed by these tariffs are passed on to consumers; the tariffs announced February 1 would cost a typical middle-income household around $1,200 per year, according to one estimate," the brief states. "Tariffs can also provoke trade wars, which can harm domestic businesses."
Republican proposals would deliver trillions in tax cuts benefiting high-income households and profitable corporations, while cutting health and food assistance. This would increase poverty, reduce housing stability, and raise prices through new tariffs. www.cbpp.org/research/fed...
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— Center on Budget and Policy Priorities (@centeronbudget.bsky.social) February 4, 2025 at 10:55 AM
The document argues that "instead of extending and expanding costly tax breaks for those who least need help, Congress should create a more equitable federal tax system that raises revenue sufficient to meet the nation's needs and requires wealthy households and corporations to pay their fair share."
"As a first step, Congress should let the 2017 tax cuts for households with high incomes expire on schedule," the brief says. "Congress also should expand the child tax credit, especially for the roughly 17 million children who don't receive the full credit today because their families' incomes are too low, and expand the earned income tax credit for workers not raising children in their home, who now receive little or nothing from the credit."
"In addition, Congress should scale back corporate tax breaks and reduce the special tax breaks enjoyed by very wealthy households that shield their considerable income from taxation," the report concludes. "And Congress should provide the IRS with the funding it needs to enforce the nation's tax laws and better ensure that wealthy people and corporations pay the taxes they legally owe."
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Exposed: Republicans Trying to Kill Free 'Direct File' Program Funded by For-Profit Tax Prep Industry
"Direct File should be expanded, kept permanent, and be held up as a model for government programs enacted to help average Americans—not corporate America."
Jan 30, 2025
The popular, free Direct File program introduced by the Internal Revenue Service in 2024 is being expanded this tax season despite the objections of dozens of congressional Republicans—but an analysis released Thursday reveals why GOP lawmakers are so intent on ensuring the Trump administration ultimately eliminates the program and forces taxpayers to rely on services from private tax filing corporations.
The 29 Republicans who sent a letter to President Donald Trump in December asking him to end Direct File with a "day-one executive order" have received more than $1.8 million in campaign contributions over the course of their careers from "Big Tax Prep and their proxies," said the consumer advocacy watchdog Public Citizen.
The companies that have donated to the lawmakers include Intuit and H&R Block, as well as the American Coalition for Taxpayer Rights—a group of lobbying firms that work on behalf of the tax filing industry.
With Direct File offered to taxpayers in 25 new states starting this week—after being available in 12 states last year—Public Citizen revealed that in 2024, the industry and its lobbying firms contributed more than $700,000 to the Republican lawmakers who wrote the letter.
Lobbyists and lobbying firms contributed most of the money detailed in the report—more than $1.5 million of the total. The remaining money was donated by political action committees (PACs) for H&R Block, Intuit, and the lobbying firms.
"The new administration must stand up to greedy Big Tax Prep giants and their army of hired lobbyists by continuing to build on the popular Direct File program beyond this tax season."
U.S. Rep. Adrian Smith (R-Neb.), who spearheaded the letter claiming Direct File poses a "threat to taxpayers' freedom from government overreach," received the second-most campaign donations of any of the signatories.
The tax filing industry and lobbying firms have given Smith $224,350 over the course of his career, second only to Rep. Darin LaHood (R-Ill.), who received $242,256.
Both also received more money from tax filing interests in 2024 than any other lawmaker.
Public Citizen noted that 12 of the signatories represent five of the states with Direct File pilot programs in place last year.
"According to data from the Economic Security Project, a combined 15.2 million taxpayers in these states were eligible for the program in the first year," reads the report. "Had they all used the program, these taxpayers would have saved more than $2.4 billion in filing fees."
With the 12 lawmakers having taken more than $640,000 from "the Direct File opposition and their proxies throughout their career... these Republicans are putting the interests of their donors ahead of their constituents," said Public Citizen.
"Direct File is a commonsense government program that was overwhelmingly well-liked by the filers who used it during its 2024 pilot," said Susan Harley, managing director for Public Citizen's Congress Watch division. "Eligible filers in 25 states now have an option to directly e-file their taxes for free to the IRS. The new administration must stand up to greedy Big Tax Prep giants and their army of hired lobbyists by continuing to build on the popular Direct File program beyond this tax season."
According to the report, donations from the tax filing industry have particularly flowed toward Republicans who sit on the House Ways and Means Committee, which has jurisdiction over the IRS and taxation.
"Together, these signers have received more than $1.3 million over their careers including more than $500,000 during the 2024 cycle," said Public Citizen. "These members account for nearly two-thirds of the Republican majority on the committee."
People in 25 states will be able to save hundreds of dollars by filing their taxes without paying a private company or giving a cut of their refund to Intuit or H&R Block, noted Public Citizen.
"These savings can provide some financial relief at a time when budgets are stretched thin," said the group. "Direct File should be expanded, kept permanent, and be held up as a model for government programs enacted to help average Americans—not corporate America."
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Top Dem Says Trump 'External Revenue Service' Can't Hide Plans for Huge Tax Gift to the Rich
"No amount of silly rebranding will hide the fact that Trump is planning a multitrillion-dollar tax hike on American families and small businesses to pay for another round of tax handouts to the rich," said Sen. Ron Wyden.
Jan 14, 2025
The top Democrat on the Senate Finance Committee said Tuesday that President-elect Donald Trump's proposed creation of an "External Revenue Service" to collect tariff proceeds can't conceal his plans for a massive tax giveaway to the wealthy and large corporations.
"No amount of silly rebranding will hide the fact that Trump is planning a multitrillion-dollar tax hike on American families and small businesses to pay for another round of tax handouts to the rich," Sen. Ron Wyden (D-Ore.) said in a brief statement after Trump announced his proposal in a social media post.
The president-elect wrote that on the first day of his new term, he intends to create "the EXTERNAL REVENUE SERVICE to collect our Tariffs, Duties, and all Revenue that come from Foreign sources."
"We will begin charging those that make money off of us with Trade, and they will start paying, FINALLY, their fair share," Trump added. "January 20, 2025, will be the birth date of the External Revenue Service."
Only Congress can establish new executive branch agencies, so it's unclear how Trump's proposed External Revenue Service would be established. Currently, U.S. Customs and Border Protection collects tariff revenue.
Outside advisers to Trump anonymously toldThe Washington Post that the president-elect's plan "could involve renaming an existing office within the Treasury Department."
Trump and Republican lawmakers have pointed to tariff revenue—along with deep cuts to Medicaid, federal nutrition assistance, and other key programs—as a potential way to help offset the huge projected cost of their proposed extension of the 2017 tax cuts, parts of which are set to expire at the end of the year.
But the Institute on Taxation and Economic Policy (ITEP) noted in an analysis conducted shortly before the November election that the sweeping tariffs Trump has floated "would largely be passed onto consumers as increased prices." Those price increases "would more than offset" Trump's proposed tax cuts "for all income groups outside the richest 5%."
"If these proposals were in effect in 2026, the richest 1% would receive an average tax cut of about $36,300 and the next richest 4% would receive an average tax cut of about $7,200," ITEP found. "All other groups would see a tax increase, with the hike on the middle 20% at about $1,500 and the increase on the lowest-income 20% of Americans at about $800."
Trump's call for the creation of an "External Revenue Service" comes days after CNNreported that the president-elect is "considering declaring a national economic emergency to provide legal justification for a large swath of universal tariffs on allies and adversaries."
"The declaration would allow Trump to construct a new tariff program by using the International Economic Emergency Powers Act, known as 'IEEPA,' which unilaterally authorizes a president to manage imports during a national emergency," the outlet continued, citing unnamed sources. "Trump, one of the sources noted, has a fondness for the law, since it grants wide-ranging jurisdiction over how tariffs are implemented without strict requirements to prove the tariffs are needed on national security grounds."
The emergency declaration could come as soon as Inauguration Day, according toAxios.
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