Republicans in the U.S. House of Representatives Budget Committee recently circulated a draft list of policy options, some of which would help pay for the extension of the expiring provisions of the Tax Cuts and Jobs Act of 2017 and set President Donald Trump’s tax policy agenda.
The document has not been officially published by the Budget Committee but has been covered extensively in the press, and Senate Finance Committee ranking member Ron Wyden, D-Ore., shared the list in a January 17 post on the social media platform Bluesky.
The 50-page document presents an array of policy options that Republicans might consider to help offset the cost of extending some TCJA provisions, which the Congressional Budget Office has estimated would cost $4.6 trillion over 10 years. However, the list does not explicitly say that these are exclusively revenue raisers, and in fact it includes numerous provisions that would instead increase the deficit but represent long-held Republican policy preferences.
Proposals
The list of policy options are set out under 11 by congressional committees – Ways and Means, Energy and Commerce, Agriculture, Education and Workforce, Financial Services, Science, Space and Technology, Natural Resources, Oversight and Government Reform, Judiciary, Homeland Security, Transportation and Infrastructure – and each proposal has been assigned an estimated dollar value representing the savings or costs the change would entail over the 10-year budget window.
The Ways and Means section includes 45 tax proposals, some addressing the same issue. For example, there are two options regarding the corporate tax rate -- lower the rate from the current 21% to 15% (at a $522 billion cost) or to 20% (at a $73 billion cost).
Similarly, the plan considers three options for the state and local tax (SALT) deduction:
- Repeal the SALT deduction, currently capped at $10,000 (but set to expire at the end of 2025), entirely ($1 trillion in savings);
- Make the $10,000 cap permanent, but double it to $20,000 for married couples (($100 billion to $200 billion cost); or
- Cap the SALT deduction at $15,000 for individuals and $30,000 for married couples (($500 billion cost).
The home mortgage interest deduction would be either eliminated (resulting in $1 trillion in savings) or subject to a $500,000 cap mortgage debt, rather than the current $750,000 limit.
Consistent with President Trump’s campaign proposals, the list includes proposals to eliminate income tax and payroll taxes on tips and on overtime wages, at a cost of $106 billion and $750 billion, respectively.
The proposals being considered include the repeal of tax measures introduced under the Inflation Reduction Act of 2022 (IRA):
- The corporate alternative minimum tax, which imposes a 15% tax on some corporations’ adjusted financial statement income (at a cost $222 billion);
- Renewable energy tax credits created or expanded under the IRA, estimated to result in $796 billion in savings. However, the document acknowledges the possibility that “based on political will,” a full repeal may not be feasible, and more limited reform options would be considered.
- IRS enforcement funding, which the document estimates would reduce outlays by $20 billion, but also reduce revenues by $66.6 billion, resulting in a net increase to the deficit of $46.6 billion.
Some proposals would result in only modest savings. For instance, the list includes three proposals regarding employer-provided benefits, which are currently excluded from taxable income. The proposals would eliminate the exclusion for employer-paid transportation benefits ($50 billion in savings), on-site gyms ($20 billion in savings), and meals and lodging ($87 billion in savings).
Finally, the document puts forward a proposal to eliminate the estate tax, which in 2025 is imposed on estates whose value exceeds $13.6 million. This option would eliminate the estate tax entirely, at a $370 billion cost.
Beyond the Tax Code
Not surprisingly, given the attention paid during the presidential campaign to the possibility of imposing a variety of tariffs on imports, the list of options includes a 10% across-the-board tariff on all imports, estimated to bring in savings of $1.9 trillion over 10 years.
A separate option would codify and increase the Section 301 tariffs that were implemented during the previous Trump administration, imposing duties ranging from 7.5% to 25% on a wide array of Chinese imports, for savings of $100 billion over 10 years.
Next Steps
The document posted by Senator Wyden is a compilation of Republican tax policy ideas and options, some of which would raise revenue to pay for the reconciliation bill the House GOP is assembling, and others would implement President Trump’s and the GOP’s tax agenda.
While a legislative timeline has not been released, it is expected that tax policy will be taken up in 2025, possibly by summer.