{"id":10989,"date":"2025-07-05T20:03:01","date_gmt":"2025-07-05T20:03:01","guid":{"rendered":"https:\/\/bluelightnews.com\/category\/politics\/how-trumps-very-maga-tax-cuts-break-with-gop-tradition\/"},"modified":"2025-07-05T20:03:01","modified_gmt":"2025-07-05T20:03:01","slug":"how-trumps-very-maga-tax-cuts-break-with-gop-tradition","status":"publish","type":"post","link":"https:\/\/bluelightnews.com\/category\/politics\/how-trumps-very-maga-tax-cuts-break-with-gop-tradition\/","title":{"rendered":"How Trump\u2019s Very MAGA Tax Cuts Break with GOP Tradition"},"content":{"rendered":"
\n

For decades, Republicans have extolled the virtues of removing loopholes and carveouts from the tax code, arguing it would make the system fairer and more efficient, while allowing for lower overall tax rates.<\/p>\n

\u201cThe tax code is littered with hundreds of preferences and subsidies that pick winners and losers and create complexity,\u201d House Republicans led by then-Speaker Paul Ryan and then-Rep. Kevin Brady, said in their 2016 tax plan<\/a>. \u201cInstead of free-market competition that rewards success, our tax code directs resources to politically favored interests, creating a drag on economic growth and job creation.\u201d<\/p>\n

Fast forward to the present day, and one thing is for sure: President Donald Trump\u2019s One Big Beautiful Bill is not an exercise in tax simplification.<\/p>\n

Instead, it began with a push to extend the party\u2019s 2017 tax cuts \u2014 which despite some streamlining also introduced some complexity \u2014 and piled more on top, in line with a slew of presidential campaign promises. Add in a heavy dose of congressional politics, and the result was a sprawling and quirky piece of legislation that is distinctively Trumpy: lower taxes and<\/i> a bigger pile of tax breaks.<\/p>\n

\u201cIt\u2019s certainly a departure from what Republicans were trying to do in 2017 and broadly a departure from what Republicans have been arguing for decades about tax reform,\u201d Kyle Pomerleau, a senior fellow at the conservative-leaning American Enterprise Institute, told me.<\/p>\n

The question, though, is not just whether doing your taxes is complicated and annoying. It\u2019s whether that complexity serves a particular purpose. For example, a provision in the GOP bill allows businesses to deduct expenditures on machinery and equipment entirely from their taxes, which could both encourage investment and support Trump\u2019s reindustrialization goals.<\/p>\n

For other key parts of the bill, several economists I spoke with worried it is the worst of all combinations: increasing the debt to pay for tax breaks that lead to neither growth nor other economically useful outcomes.<\/p>\n

\u201cI don\u2019t want to say it\u2019s vote-buying because that\u2019s probably a normative statement that is outside of my wheelhouse, but \u2026 there\u2019s not a lot of pro-growth stuff,\u201d said Kent Smetters, a University of Pennsylvania business professor who serves as the faculty director of the Penn Wharton Budget Model.<\/p>\n

Take, for example, Trump\u2019s popular campaign promises of no tax on tips and no tax on overtime. In some cases, those provisions simply reward people for their existing lifestyle. In others, it might lead businesses to restructure how they pay their employees.<\/p>\n

It\u2019s obviously great news either way for the employees who benefit. It\u2019s just unclear why the government is choosing to reward these particular subsets of workers over others. (It is presumably not an accident that Trump promised this tax perk to voters as he was pushing in the last election to win Nevada, a state where many hospitality and gaming industry workers rely on tipped income.)<\/p>\n

And cutting taxes without finding some way to offset the lost revenue \u2014 either by closing loopholes to broaden the scope of people and businesses that are taxed, like in 1986, or through some other method \u2014 leads to increased debt that can itself be a drag on growth. After all, investors are lending the money to the U.S. government rather than doing something else with it. And even after spending cuts, the new GOP tax law is still expected to add trillions to deficits over the next decade.<\/p>\n

\u201cThe money has to come from somewhere,\u201d said Alan Auerbach, a professor at the University of California at Berkeley.<\/p>\n

In that sense, the tax cuts under President George W. Bush weren\u2019t the ideal way to structure policy either, as they mostly just lowered rates while increasing the debt. But this bill? \u201cIt\u2019s worse than the Bush tax cuts because the scale is so much bigger, and there\u2019s a lot more weird stuff in it,\u201d Auerbach said.<\/p>\n

The gargantuan scale and eccentricity of the tax package is a reflection, above all, of the president who propelled it into law, and it reveals how much the Republican Party has changed under his leadership. In the 2016 GOP policy document, under Ryan and Brady\u2019s direction, the party cited tax reform legislation passed in 1986 \u2014 which decreased the number of tax brackets, slashed deductions and lowered rates \u2014 as a guiding light, saying the party\u2019s goal was to \u201creplicate and build upon this achievement.\u201d<\/p>\n

But this is now the party of Donald Trump, not Ronald Reagan.<\/p>\n

Trump, in\u00a0a 1999 Wall Street Journal op-ed<\/a>, referred to the bipartisan 1986 law as \u201can offense against the working man,\u201d decrying the removal of certain deductions as \u201cpredictably disastrous.\u201d<\/p>\n

Now the Trump administration needs to defend the law and all its peculiarities.<\/p>\n

Joe Lavorgna, who works at the Treasury Department as a counselor to Secretary Scott Bessent, said many critiques of the new law miss the point. A critical priority for Trump, he said, was avoiding the expiration of the 2017 tax cuts, which would have led to higher tax rates and therefore slower growth.<\/p>\n

He said language that allows people to deduct the interest they pay on auto loans for American-made cars, for example, will help boost the goal of having a \u201cvibrant, healthy\u201d domestic car industry.<\/p>\n

Lavorgna also said the provision removing taxes on overtime will lead to more output. \u201cAnything that incentivizes people to work an extra hour because they\u2019re not going to be taxed on it or be taxed at the same rate\u201d creates benefits for the economy, he said. \u201cIt\u2019s not a giveaway. They\u2019re creating something.\u201d<\/p>\n

As for no tax on tips? That will \u201chelp people who have been under significant cost of living pressure,\u201d he said.<\/p>\n

Ultimately, what\u2019s clear is that cutting taxes is still the centerpiece of the Republican Party \u2014 the rallying cry that could bring together a fractious governing coalition.<\/p>\n

But tax reform<\/i>? That conservative dream seems to have died quietly.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

For decades, Republicans have extolled the virtues of removing loopholes and carveouts from the tax code, arguing it would make the system fairer and more efficient, while allowing for lower overall tax rates. \u201cThe tax code is littered with hundreds of preferences and subsidies that pick winners and losers and create complexity,\u201d House Republicans led […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-10989","post","type-post","status-publish","format-standard","hentry","category-congress"],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/bluelightnews.com\/category\/politics\/wp-json\/wp\/v2\/posts\/10989","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bluelightnews.com\/category\/politics\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bluelightnews.com\/category\/politics\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bluelightnews.com\/category\/politics\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/bluelightnews.com\/category\/politics\/wp-json\/wp\/v2\/comments?post=10989"}],"version-history":[{"count":0,"href":"https:\/\/bluelightnews.com\/category\/politics\/wp-json\/wp\/v2\/posts\/10989\/revisions"}],"wp:attachment":[{"href":"https:\/\/bluelightnews.com\/category\/politics\/wp-json\/wp\/v2\/media?parent=10989"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bluelightnews.com\/category\/politics\/wp-json\/wp\/v2\/categories?post=10989"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bluelightnews.com\/category\/politics\/wp-json\/wp\/v2\/tags?post=10989"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}