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T.S. Eliot wrote “April is the cruelest month” in his poem The Waste Land. Those words were written in 1922, but might as well been written in 2025 with Tax Day approaching and the tariffs bringing pain to Wall Street and Main Street. The good news is that Congress is making progress extending the Tax Cuts and Jobs Act of 2017 (TCJA). The TCJA was a landmark piece of tax legislation that lowered taxes for individuals and corporations, increased investments, and encouraged economic growth. TPA encourages Congress to act now to extend key provisions in the TCJA and capitalize on a new opportunity to continue to simplify the tax code and benefit taxpayers and businesses. TCJA lowered marginal rates across all income brackets, reducing the tax burden for individuals and creating opportunities for increased economic activity; doubled the standard deduction, simplifying the tax bill for many Americans; lowered the corporate tax rate from 35 percent to 21 percent, encouraging investment and business growth; created a cap of $10,000 for the state and local tax (SALT) deduction (see more below) for individual filers, simplifying the tax code across state lines; Enabled pass through businesses to deduct 20% of income, further contributing to business growth and stability for small businesses; doubled the estate tax exemption, allowing for more flexibility for family-owned businesses to transition ownership; and maintained the carried interest exemption for investment managers, shifting the qualified period from 1 to 3 years, a provision that is key for firms to reinvest in new businesses and contribute to economic innovation. It’s been a stressful April for taxpayers and consumers, passing the extension could help reverse that.
Too Much SALT is not Healthy
As Congress continues toward extending the expiring provisions of TCJA, the SALT deduction has emerged as a key point of contention between lawmakers. The current cap on the SALT deduction allows for individuals and joint filers to itemize up to $10,000 in property and income taxes paid to state and local governments. Functioning as a form of federal subsidy, the SALT deduction shifts the federal cost-sharing burden from high-tax state and local governments to low-tax jurisdictions across the country. The cap established by the TCJA has empowered state and local governments to be mindful of their own budgets and tax policy. No more would the federal government soften the blow of their tax-and-spend politics. Notably, low- and middle-income taxpayers rarely benefit from the SALT deduction, as the TCJA doubled the standard deduction and limited itemized deductions. The SALT deduction presents a test for how lawmakers plan to combat the deficit while extending the expiring TCJA provisions. The cap of $10,000 for both individual and joint filers has been a way to increase revenues. Not including the SALT cap when extending expiring provisions will add billions of dollars to the deficit. Raising the SALT cap will also complicate the tax code because raising the cap to $20,000 would see a significant increase in filers who itemize their deductions. Because the TCJA further limited itemized deductions and expanded the standard deduction, it was effective in making the tax code simpler for all filers. Expanding the SALT cap would undo that work.
There are a number of other proposals surrounding SALT. One includes raising the cap to $15,000 for individuals and $30,000 for joint filers. Another entails making the current cap permanent but doubling for married couples. Yet others would eliminate the income and sales tax deduction portion of SALT. Each of these proposals would cost more than $100 billion on their own, causing more pressure on the deficit. Another idea floated by lawmakers is including a limit on corporate SALT alone. Corporations and individual filers should be treated similarly by the tax code. A cap should apply to both or neither. As the cap on the deduction allows for state and local tax policy to be assessed more closely, a limit on corporate SALT is just another way to further limit taxpayers from across the country from having to contribute to federal coffers on behalf of taxpayers in California, New York, and New Jersey. Additionally, lawmakers have proposed fully repealing the SALT deduction rather than just extending the cap. This proposal is sure to get pushback from members like Rep. Lawler. However, it is an attractive solution for future debates, if the cap is permanently implemented. Eliminating the deduction fully would lower deficits by around $1 trillion over the next 10 years. It would also put pressure on high-tax state lawmakers to ease the burden they place on their constituents.
Other proposals to eliminate the SALT deduction for businesses or the sales tax limitation also increase government revenues but by smaller margins. Any proposal to limit SALT is good, as the deduction only benefits certain states and high earners. Lawmakers should be aggressive in how they approach the SALT deduction because extending the expiring cap is only a first step to continuing to simplify the tax code. Overall, the debate on SALT is an area of potential for lawmakers to continue to create simpler and more efficient tax code, which should be the goal of tax reform. Preventing the TCJA provisions from expiring at the end of 2025 should be the top priority, but Congress should not stop there when it comes to SALT.
This Tax Day, End EV Subsidies
It’s almost Tax Day, and (not so) shockingly, there are glitches in the tax collection and filing process. On March 31, Detroit Free Press and USA Today contributor Susan Tompor noted, “Some drivers who bought electric vehicles in 2024 have found it impossible to claim their EV [electric vehicle] tax credits now when filing their tax returns, thanks to a glitch. ... The National Association of Auto Dealers informed its members that the Internal Revenue Service has reopened its portal for dealers to submit time of sale reports for EVs sold last year. It's an unusual step to fix a nagging tax problem.” The truth is that the EV tax credit itself is the glitch. For too long, taxpayers have had to foot the bill for their wealthier neighbors’ vehicle choices that aren’t even better for the environment. It’s time for lawmakers to finally get rid of the EV credit and make the entire tax system simpler and fairer. Under the current system, EV buyers can claim an up-to $7,500 tax credit — provided the bizarre sourcing and production requirements are met. Additionally, married couples filing jointly can only claim the credit if they make $300,000 or less. That figure lowers to $225,000 for heads of households and $150,000 for all other filers.
The architects of the Inflation Reduction Act (IRA) believed that, by adding modest income requirements, the tax credit could ditch its “Robin Hood in reverse” reputation. Unfortunately, low-income Americans are still footing the bill for rich Americans’ EVs. According to a 2024 Gallup survey, 14 percent of “upper income” Americans (with household income exceeding $100,000) report owning an EV, compared to 5 percent of “middle income” Americans and just 3 percent of “lower income” Americans. This EV ownership gap is backed up by industry survey data, which finds that EV buyers are about three times wealthier than ordinary Americans. Even with bank-breaking tax credits, EVs remain significantly more expensive than conventional vehicles and are effectively a status symbol for the wealthy. And, even with the income limits put in place, it’s easy for Americans earning six-figures to claim the credit at other taxpayers’ expense. In all but Washington, DC and a few other high-cost cities, a family earning $300,000 per year is a wealthy one, and their toys should not be subsidized by Americans living paycheck to paycheck.
This unfair wealth transfer doesn’t come cheap. According to a 2024 analysis by the Tax Foundation, EV tax credits can cost up to $8 billion per year. And, this total can easily skyrocket if politicians play politics and loosen income caps or North American sourcing requirements. And, for all this check-writing, there’s little evidence that these tax credits will do anything for the environment. While “green” vehicles probably don’t reduce carbon emissions (depending on the underlying energy grid they are drawing from), the extraction process required for lithium-and-cobalt car batteries is filthy, exploitative, and breeds instability. Investigating conditions at Congolese mines, the Washington Post concludes, “mining activity exposes local communities to levels of toxic metals that appear to be linked to ailments that include breathing problems and birth defects, health officials say.” Sure, these jobs may still be the best option for workers facing disease and starvation. But the resulting pollution holds back entire communities, including the children being forced to mine. And, due to the political instability gripping Congo, mine disruption can wreak havoc on battery prices worldwide. The IRA’s sponsors may have thought they were avoiding this issue by creating strict sourcing requirements. The reality is that significant importation is inevitable — unless consumers are ready to pay $500,000 for an EV. EV tax credits are not only deeply unfair and harmful to vulnerable populations but are also incredibly costly. This Tax Day, policymakers should axe the tax credit and work on pro-growth tax reform.
Blogs:
Monday: TPA Opposes Colorado Interchange Bill
Tuesday: Taxpayer Watchdog Slams Senate Budget Proposal Over Its Disregard for Fiscal Responsibility
Wednesday: TPA Releases One-Pager on the Impacts of “Liberation Day” Tariffs
Thursday: This Tax Day, End EV Subsidies and For Tax Day, Extend the TCJA
Media:
April 3, 2025: Mining Awareness mentioned TPA in their article, "US Senators Kaine, Klobuchar, Warner Statement Following Passage of Senate Bill to Undo Trump’s Canada Tariffs."
April 3, 2025: The Baltimore Sun (Baltimore, Md.) quoted me in their article, "Amid residency concerns, taxpayers also learn about perks BCPS superintendent receives."
April 3, 2025: WBFF Fox45 Baltimore (Baltimore, Md.) quoted me in their article, "Maryland's $1B tax package faces criticism as legislative session nears end."
April 3, 2025: WBFF Fox45 Baltimore (Baltimore, Md.) quoted me in their article, "Mayor Scott's proposed budget funds organization that funds his office."
April 3, 2025: Florida Daily ran TPA's op-ed, "Astronauts’ Long Vacation Shows Need for NASA Reform."
April 3, 2025: WBFF Fox45 Baltimore (Baltimore, Md.) quoted me in their segment on tax increases.
April 3, 2025: The Arizona Mirror (Phoenix, Ariz.) and 30 other news outlets mentioned TPA in their article, "Economists blast calculations for ‘bombshell’ Trump tariffs as faulty while stocks plunge."
April 3, 2025: Townhall ran TPA's op-ed, "Dismantling the FDA's Tobacco Office Marks a New Beginning."
April 3, 2025: States News Service mentioned TPA in their article, "KAINE, KLOBUCHAR AND WARNER ISSUE STATEMENT FOLLOWING PASSAGE OF THEIR BILL TO UNDO TRUMP'S CANADA TARIFFS."
April 4, 2025: WBFF Fox45 Baltimore (Baltimore, Md.) quoted me in their segment on the ongoing struggles related to Maryland's budget.
April 4, 2025: American Family News mentioned TPA in their article, "Trump's big gamble on tariffs a bold attempt to end 'America Last'."
April 4, 2025: WJLA Channel 8 DC (Washington, D.C.) interviewed TPA research director David McGarry for their segment on tariffs.
April 4, 2025: WBFF Fox45 Baltimore (Baltimore, Md.) quoted me in their segment on potential revenue from taxes in the face of Maryland's budget deficit.
April 5, 2025: WZTA Radio (West Palm Beach, Fla.) interviewed me for their segment on Social Security and Medicare.
April 5, 2025: WBFF Fox45 Baltimore (Baltimore, Md.) quoted me during their segment on Maryland's taxes.
April 5, 2025: The Baltimore Sun (Baltimore, Md.) quoted TPA in their article, "Baltimore budget funds for nonprofit raises questions."
April 6, 2025: WZTA Radio (West Palm Beach, Fla.) interviewed me for their segment on Medicare Advantage.
April 6, 2025: Impact News Service mentioned TPA in their article, "Industry Support Grows Ahead of Vote on Kaine, Klobuchar & Warner s Bill to Undo Trump s Canada Tariffs."
April 7, 2025: Issues & Insights published TPA’s op-ed, "RFK Jr. Offers An Unhealthy Dose Of Bureaucracy."
April 7, 2025: ArsTechnica mentioned TPA in their article, "The speech police: Chairman Brendan Carr and the FCC’s news distortion policy."
April 7, 2025: WBFF Fox45 Baltimore (Baltimore, Md.) interviewed me for their segment on tariffs.
April 7, 2025: American Investment Council mentioned TPA in their article, "Policymakers and Thought Leaders Speak Out Against Investment Tax Increases."
April 7, 2025: American Family News mentioned TPA in their article, "GOP rep: Trump 'on right path' with art-of-the-deal tariff negotiations."
April 7, 2025: The Baltimore Sun (Baltimore, Md.) ran TPA’s op-ed, "Let the free market decide whether wind power is viable."
April 8, 2025: Inside Sources published TPA's op-ed, "Congress Needs to Make the Right Choice on SALT."
April 8, 2025: Florida Daily (Fleming Island, Fla.) quoted TPA in their article, "Banning Earmarks from Florida Congressional Members."
April 8, 2025: WBFF Fox45 Baltimore (Baltimore, Md.) quoted TPA in their article, "Energy giants dominate Maryland lobbying with $86M push as legislative session wraps."
April 9, 2025: Alabama Daily News (Montgomery, Ala.) ran TPA’s op-ed, "Smart Tax Policy Would Incentivize Alabamans Who Smoke to Quit."
April 9, 2025: AL.com (Montgomery, Ala.) ran TPA’s op-ed, "Smart Tax Policy Would Incentivize Alabamans Who Smoke to Quit."
April 10, 2025: Federal Newswire ran TPA's op-ed, "Carr's Push for Deregulation Aims to Expand Broadband Access."
Have a great weekend!
Best,
David Williams
President
Taxpayers Protection Alliance
1101 14th Street, NW
Suite 500
Washington, D.C. xxxxxx
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