Republicans lay groundwork for 'total tax cliff' at end of Trump's term

[BumRushDaShow]

Source: The Hill

06/12/25 6:30 AM ET


Congressional Republicans are laying the groundwork for a tax cliff at the end of President Trump’s term in office. While the conference is pushing to make the 2017 Trump tax cuts permanent, additional measures geared toward working-class Americans are being slated for expiration at the end of 2028. “It means that’s going to be an issue in the next presidential race,” House Freedom Caucus Chair Andy Harris (R-Md.) said Tuesday.

The major expiring tax breaks in the House-passed version of Republicans’ domestic agenda bill are boosts in the standard deduction, the deduction for seniors, and the child tax credit, along with the cancellation of taxes on tips, overtime pay, and car loan interest. Budget hawks are saying this sets up a “tax cliff” in the legislation similar to the one Republicans are now trying to surmount, since most of the 2017 Trump tax cuts expire at the end of this year.

“There’s a total tax cliff in there. There’s about $1.5 trillion worth of taxes that expire in four years, five years, which means what? In five years, they’ll just keep them going. This is why we end up with the same problem,” Rep. Chip Roy (R-Texas) said last week. “It is 100 percent a gimmick to have tax cuts that you’re putting in place for four or five years,” he added.

The legislation is likely to undergo substantial changes in the Senate, including a change in the accounting baseline that will allow trillions of dollars worth of deficit additions coming from the extension of previous tax cuts to be ignored.

Read more: https://thehill.com/business/5344999-republicans-tax-cliff-trump/

[IbogaProject]

1. Heaven forbid they ever expire any wealthy tax cuts

Those cuts on the most wealthy's taxes are permanent only the temporary tax breaks for the working class have these "cliffs". W did this in his tax bills and they did in in 2017 both to game the CBO score. I wish we had ever tried to run against those as this has always been a bread and butter issue and they blame us for "democratic party spending" when it is GOP delayed effect tax time bombs.

[LiberalArkie]

2. That is the solution. To rollback the Reagan tax cuts back to the 75% or 90% to Make America Great Again

[Grins]

13. Got my vote! One day we will do it, because THERE IS NO OTHER CHOICE!

A great line I heard when Obama, faced with the time-bomb set up by Republicans under Bush II, wanted to raise the top tax rate to 39 1/2%:

“If 59% was good enough for Reagan, 39% should be good enough for Republicans.”

[Baitball Blogger]

3. We should ignore rulings that are not

Actionable in their own terms.

[progree]

4. including a change in the accounting baseline that will allow trillions of dollars worth of deficit additions coming fro

including a change in the accounting baseline that will allow trillions of dollars worth of deficit additions coming from the extension of previous tax cuts to be ignored.

Hmmm. I will have to read about that when I have a bit more time. Is this the Republican crap that tax cuts don't increase deficits (and even lower them) because the wealthy have more incentive to work harder growing their businesses because they keep more of their money when taxes are lowered or something?

[BumRushDaShow]

5. Senate Budget Committee Ranking Member Jeff Merkley explains it here

https://www.budget.senate.gov/ranking-member/newsroom/press/heres-what-theyre-saying-bipartisan-policymakers-and-budget-policy-analysts-criticize-republicans-magic-math-that-will-explode-the-deficit

From the above, an excerpt by Warren as an analogy -

U.S. Senator Elizabeth Warren (D-MA), Ranking Member of the Senate Banking Committee:

Billionaire math: “You sign your yearlong lease and pay your rent each month for your apartment. When your landlord comes back at the end of the lease and says, ‘How about signing for another year?’ You say, ‘Happy to sign. It won’t cost anything since this is an extension, right?’ Well, of course not.” [LINK]

The link in the excerpt goes to a Xitter post -

Link to tweet

Elizabeth Warren
@SenWarren
You've heard of girl math, but have you heard of billionaire math?

Trump's temporary tax handouts for the rich are expiring this year, and Republicans want working Americans to foot the bill.

They're claiming it'll cost you nothing, but in reality, these tax handouts cost trillions.
0:18 / 1:42
9:42 AM · Feb 27, 2025

[progree]

6. Thanks much for the explanation. The first paragraph of your link is a greatsummary

https://www.budget.senate.gov/ranking-member/newsroom/press/heres-what-theyre-saying-bipartisan-policymakers-and-budget-policy-analysts-criticize-republicans-magic-math-that-will-explode-the-deficit

Title: Current Policy Baseline is a “Budget Gimmick”

... bipartisan budget policy experts are sounding off on a budget gimmick to hide the high cost of their tax cuts for the wealthy and large corporations. The tactic, known as the “current policy baseline,” is misleading and has never been used before when considering legislation, much less a budget reconciliation bill with additional accompanying rules. Nevertheless, Congressional Republicans are currently championing this end-run around both law and precedent as a way to extend their disastrous tax cuts for billionaires.

[BumRushDaShow]

7. Yeah I remember when Thune first brought it up

and between theie end-run of revoking the CA Emissions Waiver and this, Senate Democrats were basically indicating that the GOP was "going nuclear".

[progree]

8. Half of the bill's passthrough deduction alone, worth $200 B in 2022 alone, went to the top 1 percent

The last 2 paragraph of your OP link
https://thehill.com/business/5344999-republicans-tax-cliff-trump/

. . . Despite locking in lower tax rates for lower earners, forecasts project the House-passed tax bill will benefit higher earners more and will redistribute wealth from the bottom to the top of the income spectrum.

Half of the bill’s passthrough deduction alone, which was worth more than $200 billion in 2022, went to the top 1 percent of taxpayers by adjusted gross income, according to the JCT.

emphasis added

Somehow I missed hearing about or knowing about the "passthrough deduction" all these years

From an AI summary from Google search (sorry)

The "passthrough deduction" in the Trump tax cuts, also known as the Section 199A deduction or Qualified Business Income (QBI) deduction, is a tax break established by the Tax Cuts and Jobs Act (TCJA) of 2017. It allows eligible taxpayers to deduct up to 20% of their qualified business income (QBI).

The deduction applies to owners of pass-through businesses like sole proprietorships, partnerships, S corporations, and some trusts and estates. Qualified Business Income (QBI) is generally the net income from a U.S. business, excluding wages, capital gains, dividends, and interest income.

Eligible taxpayers can deduct up to 20% of their QBI, subject to income limitations. This deduction is taken after calculating adjusted gross income (AGI) and applies whether itemizing deductions or taking the standard deduction.

. . .
The QBI deduction is scheduled to expire on December 31, 2025, unless Congress extends it.

The deduction was intended to provide tax relief for pass-through business owners, making their tax rates more comparable to the corporate tax rates under the TCJA. . . .

Well, that's interesting. I've been benefiting for from a QBI deduction in the past few years, according to TurboTax (based on mutual fund holdings) and never knew what it was about, well now I know. It's also a deduction that one can take even if using the standard deduction (as I do). It was a small deduction like $126 (20% of $630), which at my 27% effective federal marginal tax rate saved me $34 in taxes. Not a big chunk of the $200 B that the top 1% got.

(My 27% effective federal marginal rate comes from the sum of my 12% marginal tax rate from the tables plus 15%, because an increase in my AGI increases the amount of my capital gains subject to the 15% capital gains tax. An example of how the marginal tax rate that one gets from the tax tables and the media is misleading.

Another example for many seniors is that an increase in AGI results in more of their Social Security benefits being taxed, jacking up their actual marginal tax rate by 1.5 times or 1.85 times.

[BumRushDaShow]

9. I have another OP about the CBO report that issued today

and that report might provide some more info for you - https://www.democraticunderground.com/10143477325

Link to CBO REPORT page - Distributional Effects of H.R. 1, the One Big Beautiful Bill Act

Link to REPORT (PDF) - https://www.cbo.gov/system/files/2025-06/61387-Distributional-Effects.pdf

[progree]

11. Very interesting. Thanks /nt

[BumRushDaShow]

10. "AGI results in more of their Social Security benefits being taxed"

That's why after I got my first couple SS checks starting last year and they were coming in okay, I went to the SS office and gave them a W-4V form and had them take the max % (22%) out for income tax withholding. The options are 7%, 10%. 12% or 22%. Thank goodness I did too!

[progree]

12. Aw well. But its nice to know that income taxation of SS benefits goes into the SS system, not the general fund

https://democraticunderground.com/10143282920#post4