Trump’s Tax Plan: Stimulus or Shell Game?

Tax Cuts on Credit: The Mirage of “Big Beautiful” Growth

Here we go again. Another sweeping tax cut, another trillion-dollar gamble on growth. But if the ink on Trump’s latest tax blueprint tells us anything, it’s this: America’s economic policy playbook hasn’t evolved. It’s doubled down on trickle-down.

The House Ways and Means Committee just advanced a bill to permanently extend 2017 tax cuts, slash levies for corporations and high earners, and pile on new deductions that feel more campaign promise than fiscal strategy. No Democrat backed it. And the rhetoric? It’s pure 2016 nostalgia.

But here’s the inconvenient question: Have we learned nothing?

Suggest a more complicated truth: the returns may not trickle down fast enough or far enough to justify the cost.

The SALT in the Wound

One provision could tank the bill: the controversial State and Local Tax (SALT) deduction cap. The plan raises it to $30,000 but only temporarily for some. Republicans from high-tax states aren’t buying it. They’ve threatened a revolt unless the cap is lifted further.

And why wouldn’t they? For suburban GOP districts, SALT is political nitroglycerin. Voters remember its 2017 gutting and the property tax pain it caused. Ironically, it’s now Republicans defending a tax break often dismissed as blue-state welfare.

This intraparty fault line highlights the strange bedfellows created by tax populism. You can’t promise relief for everyone when the arithmetic doesn’t add up.

More Cuts, Fewer Offsets

Let’s talk offsets. Or lack thereof.

Spending cuts in other House committees barely dent the revenue losses. The plan partially “pays” for tax cuts by repealing clean energy credits and taxing remittances, endowments, and foundations. However, big-ticket offsets like higher corporate levies or carried interest reform were tossed aside after intense lobbying.

If this feels familiar, it should. The 2017 tax cuts were also deficit-funded. But at least they had a sunset clause. This version doubles on permanence and assumes growth will eventually close the gap.

The problem? There’s scant evidence that growth alone can plug a multi-trillion-dollar hole. According to the Congressional Budget Office and IMF, tax cuts without structural reform rarely pay for themselves, mainly when targeted disproportionately at the wealthy.

Winners, Losers, and the Quiet Repeal of Bidenomics

The new Trump tax plan is more than fiscal policy; it directly repudiates Biden-era industrial policy.

Winners:

• High-income earners, who keep the 37% top rate
• Corporations, who retain generous deductions
• Car buyers, who get tax breaks; unless they go electric
• Small businesses, benefiting from expanded expensing

Losers:

• Clean energy sector, stripped of investment incentives
• Universities and foundations, facing targeted levies
• Immigrants, with new taxes on money sent abroad
• The federal balance sheet, hemorrhaging future fiscal space

It’s a clear ideological reset: away from targeted green subsidies and toward broad-brush, consumption-driven growth. It tells us that Trump 2.0 won’t just revisit the past; it intends to erase his predecessor’s blueprint.

International Echoes: How Does This Compare?

Globally, the U.S. approach stands in stark contrast to how other economies are handling post-COVID fiscal fatigue.

• Germany and France have tilted toward industrial investment with fiscal discipline, phasing out pandemic-era tax relief cautiously.
• Canada has coupled tax breaks with targeted revenue raisers; including wealth taxes and surtaxes on banks.
• UK Conservatives, once staunch tax cutters, are now walking a tightrope with modest cuts and deficit anxiety dominating the headlines.

Trump’s plan bucks this trend. It’s expansionary without constraint Keynesianism for the wealthy, austerity deferred for later.

Strategic Advice for Business and Boards

1. Model for volatility. Permanent tax cuts today could mean program cuts or corporate levies tomorrow, especially if deficits spiral.
2. Lobby surgically. If you’re in a high-SALT district or clean energy sector, now is the time to shape carveouts.
3. Prepare for tax policy whiplash. A Democratic Senate or 2026 shift in power could unravel portions of the plan. Hedge accordingly.
4. Use the child tax credit window. The $2,500 credit won’t last forever. Families and employers should plan benefits and communications now.
5. Watch the remittance tax. For multinationals and banks handling cross-border payments, compliance costs may rise unexpectedly.

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