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WHAT A BETTER TAX BILL WOULD LOOK LIKE  
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Chuck Marr, Samantha Jacoby, Kris Cox, Stephanie Hingtgen
April 23, 2025
Center on Budget and Policy Priorities
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_ This year offers an opportunity to enact tax policy changes that
would ease the strain on household budgets that people in low-paid
jobs and their families face while ensuring that the nation’s
wealthiest pay their fair share. _

, Center on Budget and Policy Priorities

 

This year presents an opportunity to enact tax policy changes that
would ease the strain on household budgets that people in low-paid
jobs and their families face and allow them to invest in their future,
while ensuring that the nation’s wealthiest pay more of their fair
share in taxes. Expiration is approaching for a number of provisions
in the 2017 tax law
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which showered expensive tax cuts on the wealthy and failed to deliver
on promised benefits for economic growth and workers’ earnings —
so the time is ripe for a new direction.

But the economic agenda the Trump Administration and congressional
Republicans are pursuing would double down on the 2017 law’s flaws
by extending its skewed taxed cuts, which would further balloon
deficits and deliver another trickle-down failure. And to help pay for
those tax cuts, House and Senate Republicans are planning massive cuts
that would take health care and food assistance away from, and make
college less affordable for, millions of people with low and middle
incomes.
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Republicans should instead pursue one of the paths they campaigned on,
as articulated by Senator Josh Hawley in January: “for every
Republican who has hailed the new working-class coalition that
President Trump has assembled, this is the time to deliver.”
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A better tax bill would:

* Not take health care and food assistance away from millions of
people or make it harder to afford college or pay energy bills.

* Prioritize tax credits that help people make ends meet as they face
rising costs for groceries, clothes and other retail goods, health
care, and other items:

* expand the Child Tax Credit in a way that prioritizes the 17
million children in families who get less than the full credit because
their families’ incomes are too low;
* permanently extend the larger premium tax credits that are helping
people afford health coverage;
* and expand the Earned Income Tax Credit (EITC) for adults in
low-paid jobs not raising children at home, including young adults
just starting out who may be struggling.

* Require corporations and the wealthy to pay a fairer share of tax,
which will also help offset any of these tax cuts. This includes
ending tax cuts for high-income people on schedule, raising taxes on
very wealthy people and corporations that receive enormous breaks
under the current tax code, and building an IRS capable of collecting
more of the taxes that are already legally owed.

And whether as part of the tax bill or separately, Republicans in the
majority should also assert Congress’ constitutional power and
responsibility over trade policy and turn off the destructive tariffs
the Trump Administration has imposed and threatened. Separate bills
introduced by Republican and Democratic Senators and Democratic House
members are a step in the right direction.
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Administration’s tariffs will hit low- and middle-income families
particularly hard at grocery and retail stores while risking a global
recession, with all the human suffering that entails.

Don’t Take Away Health Care, Food Assistance, and College Support

One easy course correction toward crafting a better tax bill would be
for Republicans to simply not harm the low- and middle-income people
they campaigned on helping.
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One easy course correction toward crafting a better tax bill would be
for Republicans to simply not harm the low- and middle-income people
they campaigned on helping. But the Republican budget resolution
includes instructions to House committees to make $1.4 trillion in
cuts to programs in their jurisdiction that could potentially harm
low- and middle-income people.
[[link removed]] These
include instructions to the committee with jurisdiction over Medicaid
to cut at least $880 billion over ten years, the committee with
jurisdiction over food assistance through SNAP to cut $230 billion,
and the committee with jurisdiction over student loans to cut $330
billion. These programs serve tens of millions of people: Medicaid
provides health coverage that 72 million people count on; SNAP helps
over 40 million people put food on the table each month; and student
loans make higher education more affordable for millions of people.
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Republican budget resolution may also assume cuts to energy tax
credits and other climate investments, which would increase utility
bills, imperil energy reliability, and threaten jobs and investment
nationwide.
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Even cuts that are a fraction of the size of the potential $880
billion cut to Medicaid and $230 billion cut to SNAP in the House
instructions would cause serious harm. They would still increase costs
for strapped families and leave more people uninsured and unable to
afford food. And it is possible the cuts will be deeper or cover more
areas, as some House and Senate members press for far larger cuts.

These cuts are all designed to help offset the cost for wasteful, $1.8
trillion tax cuts for people in the top 5 percent of incomes. (See
Figure 1.)

Figure 1

At the same time the Republican agenda would raise costs for families
and leave more people uninsured, the Trump Administration’s tariffs
threaten volatility and price increases — and a significantly
increased risk of recession and higher unemployment — that will land
hardest on people who can least afford it.

Expand the Child Tax Credit and EITC, Extend Enhanced Premium Tax
Credit

The 2017 tax law included some structural improvements: it doubled the
standard deduction and the maximum Child Tax Credit amount while
eliminating the personal exemption. These changes cut taxes for most
people with low and moderate incomes, though only modestly, while
simplifying the tax returns of millions of taxpayers as they reduced
the number of those who need to itemize their deductions. But these
changes provide only modest help to many low- and moderate-income
families and more is needed in a tax bill to help families afford the
basics, including the cost of health care.

Child Tax Credit

The Child Tax Credit is key in helping millions of families afford the
essentials, and lifted 3.6 million people, including 2.0 million
children, above the poverty line in 2023.
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one of its greatest design flaws is that under the 2017 tax law, it
leaves 17 million children, or roughly 1 in 4 children, out of
receiving the full credit because their parents’ incomes are too
low. While most of the children left out of the full credit receive a
partial credit, children in families without income in a given year,
for reasons including job loss, health, and caregiving
responsibilities, don’t receive any credit at all.

While the 2017 tax law doubled the maximum Child Tax Credit amount
from $1,000 to $2,000, millions of children in families with low and
moderate incomes — those who would most benefit from an increase —
didn’t receive that full increase the way that children in families
with higher incomes did. In fact, millions received a Child Tax Credit
increase of _just $75 or less_ from the 2017 tax law, far below the
$1,000-per-child increase that higher income families received.
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A better tax bill would fix these flaws. The best and simplest way to
do that is to provide the full Child Tax Credit amount to all children
in families with low and moderate incomes. This is often called making
the credit “fully refundable,” because families whose credit
exceeds their income tax liability receive the full credit as a
refund. As one example, the American Family Act, recently reintroduced
in the House by Rep. Rosa DeLauro and others and in the Senate by Sen.
Michael Bennet and others, would do just that, while also increasing
the maximum credit, paying it on a monthly basis, and providing a
larger amount during the first year of a child’s life, among other
changes.
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Making the credit fully refundable would have important benefits for
children in families with lower incomes. When this feature and other
key expansions, including a larger maximum credit and advance monthly
payments, were in effect for the credit in 2021, low-income families
used the money to pay for necessities like food and housing, as well
as expanding educational opportunities for their children, like
through tuition and after-school programs.
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And the 2021 expansion, together with other pandemic relief, helped
drive down the number of children experiencing poverty to a historic
low in 2021. Black, Latino, and American Indian and Alaska Native
children, whose families face structural racism in the nation’s
economic, housing, and educational systems that depresses their
earnings, experienced particularly large decreases in child poverty.
But when the credit’s temporary expansions and other pandemic-era
assistance expired, child poverty rates rose back up. (See Figure 2.)

Figure 2

If Republicans fail to make the full credit available to the 17
million children in families whose earnings would otherwise be too low
to qualify for it, they should, at minimum, expand the credit for the
millions of children who receive some but not all of the credit,
similar to the approach taken by the bipartisan bill from January
2024. Fully 169 House Republicans voted for that legislation, which
was negotiated and championed by House Ways and Means Chair Jason
Smith. In its first year, the bill would have expanded the Child Tax
Credit for more than 80 percent of the children left out of the full
credit, boosting the credit for children in working families. When
fully in effect, it would have reduced the number of children
experiencing poverty by 500,000.
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expansion would have helped parents across the country who work in
important occupations for low pay. (See Table 1.)

One critical reform in that legislation — which should be a top
priority in the upcoming tax bill — would have allowed families with
low and moderate incomes to receive the same-sized credit for each of
their children. As it stands, higher-income families get the same
credit amount per child; lower-income families do not. The bill would
have changed this by providing the credit on a per-child basis for
families with low and moderate incomes just as it is presently
provided per child for higher-income families, providing substantial
help to the three-quarters of children left out of the full credit who
live in a family with more than one child.
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bill also would have increased and eventually eliminated the lower
maximum credit amount that applies to families with lower incomes,
often called the “refundability cap.” This improvement would allow
eligible parents to receive an increase in their credit for any
increase in their work earnings, which is inexplicably denied in
current law.
[[link removed]] Policymakers
could improve on these bill changes by also phasing in the credit from
the first dollar of a family’s earnings, as many Republicans have
proposed in the past.
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Enhanced Premium Tax Credits

Another tax policy key to working families that is missing from
Republicans’ current agenda is extending the enhanced premium tax
credits (PTCs). The enhanced credits are critical to making health
coverage in the Affordable Care Act (ACA) marketplace more affordable
to millions of people — and small business owners — across the
country. The enhanced PTCs spurred record enrollment in ACA
marketplace insurance and contributed to record low uninsured rates.
(See Figure 3.) If Congress fails to extend them, health care premiums
are going to surge by an average of 79 percent for over 20 million
people.
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Figure 3

For example:

* A single individual making $32,000 (212 percent of the poverty
level) would see their monthly marketplace premium more than double,
from $66 to $163 — an annual increase of $1,162.
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* A family of four making $65,000 (208 percent of the poverty level)
would see their monthly marketplace premium increase from $126 to $324
— an annual increase of about $2,400. (See Figure 4 for the premium
increases that a family of four would experience at different income
levels.)

Figure 4

Facing dramatic spikes in their premiums, families would be forced to
make hard decisions about their health coverage. Roughly 4 million
people would become uninsured.
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a result, they would be more likely to forgo necessary care or to
incur medical debt.
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When it comes to small businesses, the contrast between readily
available policy options is stark. On the one hand is House
Republicans’ focus on extending the 20 percent pass-through
deduction and the estate tax exemption at its current very high level;
both are billed as helping small businesses but in reality
overwhelmingly benefit the wealthy.
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the enhanced PTCs, meanwhile, would prevent 2.7 million small business
owners who get coverage through the ACA marketplaces from facing a
steep hike in health coverage costs.
[[link removed]] A
better tax bill would match the rhetoric to the reality and extend the
enhanced PTCs.

Earned Income Tax Credit

Then-candidate Trump’s campaign focused attention on the economic
circumstances of young men, especially those who don’t go to
college. But neither President Trump nor Republican members of
Congress have advanced policies to date that would meaningfully help
them. If Republicans truly want to help young adults, there is an easy
opportunity for them to seize. Young adults in lower paying jobs who
aren’t raising children at home are one of the groups largely left
out of the policy success of the Earned Income Tax Credit (EITC), a
policy that has intellectual origins with conservative economist
Milton Friedman. These young adults do not qualify for any EITC until
they turn 25, which means they miss out on critical support as they
are trying to get a toe-hold in the labor market, often in low-paying,
entry-level jobs. This also disproportionately harms Black and
Indigenous young people, who are more likely to work in low-paying
jobs due to past and present hiring discrimination, inequities in
educational and housing opportunities, and other sources of
inequality.
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But just making these young adults eligible for the EITC isn’t
enough, because the maximum credit amount for adults without children
at home who are currently eligible is very small, and the income range
for people to qualify is too limited. Under the current EITC, more
than 6 million working adults age 19 and older who aren’t raising
children at home will be taxed into, or deeper into, poverty by
federal income and payroll taxes in 2026 if these changes aren’t
made.
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should change the qualifying age range to include young people as well
as adults aged 65 and older, increase the current paltry maximum
credit amount for these adults not raising children, and expand the
income range for people to qualify. These changes were made
temporarily in 2021, and if they had been continued in 2026, they
would increase the credit for an estimated 14.5 million adults working
in various occupations for low pay, including an estimated 529,000
cooks, 358,000 truck and delivery drivers, and 269,000 construction
workers. (See Table 2.)

Pay for the Tax Cuts by Requiring the Wealthy and Corporations to Pay
a Fairer Share

The 2017 tax law was skewed in favor of wealthy people, failed to
deliver on its economic promises, and was extremely costly. Combined
with other failed trickle-down tax cuts that preceded it, first
enacted under President George W. Bush, the erosion in revenue has
been severe. Revenue as a share of GDP fell from about 19.5 percent in
the years immediately preceding the Bush tax cuts to just 16.3 percent
in the years following the Trump tax cuts, though the Congressional
Budget Office (CBO) expects revenue to rise modestly to 17.1 percent
of GDP in 2025.
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dollar terms, the difference is stark: revenues would be roughly $700
billion higher in 2025 if they were still at 19.5 percent of GDP, as
in the years before the Bush tax cuts. Policymakers who support
lowering deficits should seek to raise revenues as part of a sound
approach to address them.

Instead of addressing this revenue erosion, the Republican budget
resolution puts the upcoming tax bill on a track to compound these
fiscal policy mistakes. Two steps they are taking stand out in their
fiscal irresponsibility. First, the Senate would adopt, for the first
time ever, a “current policy” baseline which would pretend $3.8
trillion of tax cuts do not exist. Budget law generally requires that
the cost of bills that change tax and entitlement laws be evaluated by
comparing revenues and costs under the legislation to their costs
under the law if the legislation were not enacted. Under current law
these trillions of dollars in tax cuts will expire, so extending them
will cost that amount. But congressional Republicans
are _assuming_ these tax cuts will be continued and that therefore
they cost nothing, fooling nobody.

Second, the Senate reconciliation instructions allow the Finance
Committee to write a tax bill that adds $1.5 trillion to the
underlying $3.8 trillion cost. In other words, the instructions
effectively add $5.3 trillion to deficits over the nine-year period
2026-2034 (the 2017 tax cuts do not expire until the end of 2025).
This would be even more fiscally irresponsible than the original 2017
tax law. (The House bill allows the Ways and Means Committee to write
a bill that adds $4.5 trillion to deficits, assuming a current law
baseline.)

A better tax bill would instead be fiscally responsible. It would
measure the true costs of the bill using the always-used-before
current-law baseline and it would be fully paid for. This should be
accomplished in two steps. First, tax cuts for high-income people, who
did not need them in 2017 and don’t need them now, would expire on
schedule. Second, the costs of expansions in tax credits for people
with low and middle incomes, and any extensions of the 2017 tax cuts
for people who aren’t wealthy, would be paid for by having wealthy
people and corporations pay a fairer share of tax, including taxes
that are legally owed yet go uncollected.

By taking these two steps, a better tax bill would result in much
lower budget deficits than the upcoming reconciliation bill prescribed
under the Republican budget resolution. Achieving more fiscal
responsibility in this way is also far preferable to taking away
people’s health care and food assistance, increasing the cost of
college, and imposing substantial tariffs (effectively tax increases),
which are all changes that would fall most heavily on low- and
middle-income families.

Let the Tax Cuts for Wealthy People Expire

Our country has large budget deficits and glaring unmet needs, and has
experienced decades of lopsided economic growth.
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with incomes in the top 10 percent now account for about half of
overall consumption, and wealth is highly concentrated at the very
top.
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people do not need more large tax cuts.

Instead Republicans should reverse the tax cuts for wealthy people and
allow the individual and estate tax cuts to expire as scheduled.
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the tax cuts were reversed for anyone with income above $400,000, for
example, it would more than halve their cost, dropping it from $4.2
trillion to $1.8 trillion over ten years (2026-2035), according to
estimates from the Treasury Department.
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Figure 5.)

Figure 5

This is a far better approach for reducing the cost of a tax bill than
the main offsets the Trump Administration and congressional
Republicans are planning to rely on for their wasteful, regressive tax
cuts: large cuts to programs that help people afford food and medical
care, as well as enormous, sweeping tariffs on imported goods. The
tariffs Trump announced through April 15 would offset a roughly
similar percentage of the cost of extending the tax cuts (65 percent)
as reversing the tax cuts for households making over $400,000 (57
percent), but would leave most families worse off, while preserving
large tax cuts for the wealthy.
[[link removed]] (See
Figure 6.)

Figure 6

Provisions to Raise Revenue and Promote Fairness

Moreover, sound tax policies are readily available for Republicans to
pay for tax cuts. That is true even when including the $1.8 trillion
ten-year cost of extending the tax cuts for people making under
$400,000,
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the roughly $600 billion ten-year cost for the following: changing key
features of the House-passed expansion of the Child Tax Credit,
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the enhanced PTCs, and expanding the EITC for working adults not
raising children.
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Revenue should come from three main sources:

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SCALING BACK THE 2017 LAW’S CORPORATE TAX CUTS AND STRENGTHENING THE
INTERNATIONAL TAX REGIME. The centerpiece of the 2017 tax law was a
deep, permanent cut in the corporate tax rate from 35 percent to 21
percent
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a deeper cut than what the corporate community had even lobbied for.
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promised economic benefits of that rate cut failed to materialize and
the revenue raisers were flawed; policymakers should revisit both in a
better tax bill. Raising the corporate rate to 28 percent — halfway
between the current rate and the pre-2017 rate — as the Biden
Administration proposed would make the tax code more progressive while
raising around $1 trillion over ten years (2025-2034).
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Relatedly, Republicans reportedly want to reverse certain corporate
provisions
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the 2017 law that were specifically designed to raise revenue to
offset some of the cost of that law’s deep corporate rate cut. The
provisions are often mischaracterized as “extenders.” Any effort
to reverse these corporate tax increases is another reason to
simultaneously reverse the corporate tax rate cut they were designed
to offset.

The 2017 law’s international tax rules also require reforms to
better deter costly profit shifting and to better align with the
global minimum tax agreement that the United States and more than 130
other nations signed in 2021.
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2017 law exempted certain foreign income of U.S. multinationals from
U.S. tax and added a minimum tax on certain foreign profits to try to
limit incentives for foreign profit shifting. The 2017 law’s
international provisions have serious design flaws, however, and leave
significant room for multinationals to avoid taxes by shifting their
profits to low-tax countries.
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Biden Administration proposed reforms to international tax rules that
would address these flaws and would raise around $600 billion over ten
years (2025-2034) from large multinational corporations, according to
the Treasury Department.
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REQUIRING THE WEALTHIEST PEOPLE TO PAY SOME ANNUAL INCOME TAX AND
REDUCING SOME OF THE SPECIAL TAX BREAKS THEY ENJOY. To a great
degree, the federal income tax is essentially voluntary for the
nation’s richest people. Much of their income comes in the form of
gains in the value of their stocks and other assets, and they can
avoid taxes on those gains simply by holding onto their assets rather
than selling them. In addition to watching their untaxed incomes grow,
they can use this income to finance their lifestyles by borrowing
large sums against their unrealized capital gains, without generating
taxable income. And under a tax code provision known as “stepped-up
basis,” when they die any income tax owed on asset gains is erased,
and their heirs inherit them tax free — and indeed may _never_ pay
tax on them if they keep the cycle going. This dynamic exacerbates
income and wealth inequality across generations. It also widens racial
income and wealth inequalities given that the wealthiest 10 percent of
white households own more than 60 percent of the country’s wealth.
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A better tax bill would ensure that wealthy people pay some tax on the
income they earn. This should be accomplished by imposing an annual
minimum tax on all of their income, including unrealized capital
gains. At a minimum, the tax code should not simply “erase” the
tax liability of wealthy people when they die. Stepped-up basis should
be eliminated.

In addition to making sure that wealthy people pay some tax on all
their income, a better tax bill would reduce some of the special tax
breaks they get when they do pay taxes. For example, realized capital
gains and dividends, which disproportionately flow to wealthy people,
are generally taxed at a rate of 20 percent,
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below the 37 percent top rate in place in 2025 (scheduled to rise to
39.6 percent in 2026) on wages and salaries. Capital gains and
dividends should be taxed at the same rate as wages and salaries.

Taxing capital gains and dividends at ordinary rates for households
with more than $1 million in income, combined with ending the
stepped-up basis loophole, would raise about $300 billion from
2025-2034, the Treasury Department estimates.
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Other important reforms to reduce the special tax breaks wealthy
people enjoy include closing a loophole that allows certain
pass-through business owners to avoid a 3.8 percent Medicare tax that
others pay; ending the “carried interest” loophole, which lets
private equity executives treat their compensation as capital gains in
order to benefit from lower rates; and repealing the “like-kind”
exchange tax break, which lets real estate developers avoid capital
gains tax even when they sell buildings and receive profits. Combined,
these proposals would raise another $400 billion over ten years
(2025-2034), according to Treasury.
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Policymakers could also increase the 1 percent excise tax on stock
buybacks, enacted in the 2022 Inflation Reduction Act (IRA), to 4
percent, as the Biden Administration proposed. This would have the
effect of treating stock buybacks more like dividends, which are the
other basic way corporations distribute profits to shareholders.
Increasing the rate to 4 percent would raise $165 billion over ten
years (2025-2034), according to Treasury.
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PROTECTING THE IRS FROM DEBILITATING CUTS, AND REPLENISHING AND
EXTENDING MANDATORY IRS FUNDING TO REDUCE THE TAX GAP. After a decade
of budget cuts severely undermined the IRS’s ability to enforce the
nation’s tax laws and serve taxpayers,
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IRA created an $80 billion, ten-year stream of mandatory funding —
that is, funding provided directly in authorizing law rather than
through the annual appropriations process — to provide stable
funding that the IRS could count on over a longer period. This funding
has increased tax collections primarily from high-income households,
while also improving customer service for all tax filers.
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example, the IRS recovered $1.3 billion from high-income, high-wealth
individuals through efforts targeting wealthy non-filers and
millionaires with delinquent tax debt.
[[link removed]] But
all of this rebuilding is now at grave risk. Through rescissions in
the Fiscal Responsibility Act, and the appropriations bills for fiscal
years 2024 and 2025, congressional Republicans eliminated virtually
all the enforcement money that was part of the $80 billion in
mandatory funding (of the initial $45.6 billion, $1.6 billion was
obligated, $2.2 billion is still available, and the remainder was
rescinded.)
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The “Department of Government Efficiency” (DOGE) and the second
Trump Administration have led a myriad of attacks on the IRS,
targeting staff, enforcement funding, customer service for filers, and
data privacy.
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Administration reportedly has an end goal of cutting the agency
workforce by up to 40 percent.
[[link removed]] It
has made significant progress toward that aim, having fired over 7,000
IRS employees,
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a stunning 25 percent of IRS civil servants have reportedly taken the
option to retire, provided as part of DOGE’s cutback efforts.
[[link removed]]

Because every dollar spent on IRS enforcement raises multiple dollars
in revenue from increased tax collections, these cuts to IRS funding
and staff _increase_ deficits. Recent research found that every $1
the IRS spends auditing a very high-income taxpayer yields over $6 in
revenue from audit collections, and yields $12 when revenue from
increased voluntary compliance is taken into account.
[[link removed]] Staff
cuts on the scale the Administration is considering could severely
undermine voluntary tax compliance, and revenue losses could be
measured in hundreds of billions or trillions of dollars over time, if
not reversed.
[[link removed]] These
attacks on the IRS are the exact opposite of DOGE’s claimed goals;
[[link removed]] they
will lose substantial revenue and encourage more tax fraud. This is
unfair to honest taxpayers.

Instead of decimating the IRS, policymakers should be rebuilding it so
that it can perform its basic function of government, including by
fully restoring the cut IRS funding first enacted in the IRA and
making the mandatory funding stream permanent. The Treasury Department
estimated that restoring and extending the mandatory funding would
raise a net $236.7 billion over ten years by ensuring that high-income
and high-wealth households pay more of the tax they already owe under
current law but are failing to pay.
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Free IRS Tax Filing Program Should Be Built On — Not Eliminated

A better tax bill would also build on IRS efforts to make it easier
for people with simple tax circumstances to file their taxes, by
funding the successful new Direct File program and ensuring its
permanency. Now available in 25 states, Direct File is the first
electronic tax filing tool designed completely by the IRS that
provides taxpayers with a no-cost option to file their taxes directly
through the agency, instead of using outside tax preparation software
or paying a private tax preparer.

Users report high satisfaction, increased trust in the IRS, and in
many cases filing times of less than one hour.a The Treasury
Department estimates that Direct File is saving users millions in
filing costs.b

Yet the “Department of Government Efficiency” (DOGE) reportedly
cut Direct File staff at the IRS by 30 percent, and there have been
reports that the Trump Administration plans to eliminate it
entirely.c Building on, rather than cutting, Direct File would be a
meaningful way to reduce filing costs and improve people’s
experience filing taxes.

a IRS, “IRS makes Direct File a permanent option to file federal
tax returns; expanded access for more taxpayers planned for the 2025
filing season,” May 30,
2024, [link removed].

b Ibid.

c Erin Slowey and Naomi Jagoda, “IRS Planned Worker Cuts Would Hit
Advocate, Filing Tool Staff,” Bloomberg Tax, March 17,
2025, [link removed];
Fatima Hussein, “Trump administration plans to end the IRS Direct
File program for free tax filing, AP sources say,” AP News, April
17,
2025, [link removed].

End Notes

[[link removed]] It
is important to note that Republicans chose to make the corporate
provisions permanent. Compared to the provisions that expire, these
permanent corporate provisions skew even more heavily in favor of the
very wealthy, with 83 percent of their benefit flowing to people in
the top 1 percent by income. See Distributional Analysis of the
Conference Agreement for the Tax and Jobs Act, Figure 3, Tax Policy
Center, December 18,
2017, [link removed].

[[link removed]] Chuck
Marr and Samantha Jacoby, “House Republican Budget’s $4.5 Trillion
Tax Cut Doubles Down on Costly Failures of 2017 Tax Law,” CBPP,
February 28,
2025, [link removed];
Brendan Duke and Gbenga Ajilore, “Republican Agenda’s ‘Triple
Threat’ to Low- and Moderate-Income Family Well-Being,” CBPP,
updated April 17,
2025, [link removed].

[[link removed]] Senator
Josh Hawley remarks, “‘Moral Imperative’: Hawley Makes His Case
to Expand the Child Tax Credit & Support Working Families,” January
14,
2025, [link removed];
Sen. Hawley recently went into additional detail on how he would do
that, at “The GOP can give working-class Americans a historic tax
cut,” Washington Post, April 15,
2025, [link removed].
But the approach laid out in this report would have greater impacts
for people who struggle to make ends meet in the face of rising costs.

[[link removed]] Rep.
Suzan DelBene, “DelBene, Beyer Introduce Legislation to Stop Trump
Tariff Chaos, Restore Trade Authority in Congress,” March 7,
2025, [link removed];
Sen. Chuck Grassley, “Grassley, Cantwell Introduce Bill to Restore
Congress’ Constitutional Role in Trade,” April 3,
2025, [link removed].

[[link removed]] Alexander
Bolton, “Senate GOP divided over House demands for spending cuts,”
the Hill,﷟ April 11,
2025, [link removed].

[[link removed]] Centers
for Medicare & Medicaid Services November 2024 Medicaid enrollment
data, U.S. Department of Agriculture FY2024 SNAP caseload data, and
U.S. Department of Education Federal Student Loan Portfolio.

[[link removed]] Andres
Picon, Kelsey Brugger, and Nico Portuondo, “Republicans Mull
‘Thoughtful’ Phaseout of Green Credits,” E&E News, March 26,
2025, [link removed];
Aurora Energy Research, “Removal of Technology-Neutral Clean Energy
Tax Credits Could Cost Upwards of $336 Billion in Investment, Increase
Electricity Bills 10% for Consumers,” January 6,
2025, [link removed];
Aaron Bergman _et al._, “Projected Impacts of Repealing the Section
45Y and 48E Technology-Neutral Clean Electricity Tax Credits,”
Resources for the Future, March 27,
2025, [link removed];
Climate Power, “State of the Clean Energy Boom,” January 14,
2025, [link removed].

[[link removed]] CBPP
analysis of the March 2024 Current Population Survey, using the
Supplemental Poverty Measure and counting both the refundable and
non-refundable portions of the Child Tax Credit.

[[link removed]] CBPP,
“2017 Tax Law’s Child Credit: A Token or Less-Than-Full Increase
for 26 million Kids in Working Families,” August 27,
2018, [link removed].

[[link removed]] American
Family Act bill text, introduced in the Senate on April 10,
2025, [link removed].

[[link removed]] Claire
Zippel, “9 in 10 Families With Low Incomes Are Using Child Tax
Credits to Pay for Necessities, Education,” CBPP, October 21,
2021, [link removed].

[[link removed]] Kris
Cox _et al._, “About 16 Million Children in Low-Income Families
Would Gain in First Year of Bipartisan Child Tax Credit Expansion,”
CBPP, updated January 22,
2024, [link removed].
The bipartisan legislation proposed staggered improvements over three
years: 2023, 2024, and 2025. We estimated that more than 80 percent of
children left out of the full credit would have seen their credit rise
in the first year of the expansion, and that 500,000 children would
have seen their families’ incomes rise above the poverty line when
the proposal was fully in effect in 2025.

[[link removed]] Kris
Cox _et al._, _op. cit._

[[link removed]] For
more detail, see our analysis in Kris Cox _et al._, _op. cit._

[[link removed]] S.74,
Providing for Life Act of
2023, [link removed].
Sen. Josh Hawley, “Hawley Unveils New Child Tax Credit Proposal to
Support Working Families,” December 17,
2024, [link removed].

[[link removed]] Jared
Ortaliza _et al._, “Inflation Reduction Act Health Insurance
Subsidies: What is Their Impact and What Would Happen if They
Expire?” KFF, July 26,
2024, [link removed].

[[link removed]] Gideon
Lukens and Elizabeth Zhang, “Premium Tax Credit Improvements Must Be
Extended to Prevent Steep Rise in Health Care Costs,” CBPP, November
14,
2024, [link removed].

[[link removed]] Both
the Urban Institute and Congressional Budget Office estimate around 4
million people becoming uninsured. See Jessica Banthin _et al_.,
“Who Benefits from Enhanced Premium Tax Credits in the
Marketplace,” Urban Institute, June 17,
2024, [link removed];
Phillip L. Swagel, Letter to Chairman Wyden, Ranking Member Neal,
Senator Shaheen, and Congresswoman Underwood, Congressional Budget
Office, December 5,
2024, [link removed].

[[link removed]] Jennifer
Tolbert _et al._, “Key Facts about the Uninsured Population,”
KFF, December 18,
2024, [link removed].

[[link removed]] Chuck
Marr, “Yet Another Estate Tax Cut on Massive Inheritances Is a Poor
Choice,” CBPP, March 11,
2025, [link removed];
Samantha Jacoby, “Congress Should End Pass-Through Tax Break for
Millionaire Business Owners, Extend Tax Credit That Helps Small
Business Owners Buy Health Coverage,” CBPP, March 28,
2025, [link removed].

[[link removed]] Treasury
Department, “U.S. Department of the Treasury Releases New Data
Showing 3.3 Million Small Business Owners and Self-Employed Workers
Covered by Affordable Care Act Marketplaces in 2022,” September 25,
2024, [link removed].

[[link removed]] Natalie
Spievack, “For People of Color, Employment Disparities Start
Early,” Urban Institute, July 25,
2019, [link removed].

[[link removed]] CBPP
analysis of March 2024 Current Population Survey, using 2026 tax
parameters and incomes adjusted to 2026 levels. Estimate excludes
dependents. We project 2026 tax parameters using Bureau of Labor
Statistics (BLS) data on the consumer price index (CPI-U) and chained
consumer price index (C-CPI-U), and Congressional Budget Office (CBO)
projections of the C-CPI-U. We adjust incomes to 2026 levels in
several ways: we assume earnings grow at the rate of wages and
salaries plus proprietors' income per employed person aged 16 and over
in Bureau of Economic Analysis (BEA) income data through 2024, BLS
employment data through 2024, and CBO income and employment
projections for 2026; we assume rental, interest, and dividend income
grow at their rate of growth per person aged 16 and over in BEA income
data through 2024 and CBO income and population projections for 2026;
and we adjust all other income for changes in the CPI-U using BLS data
through 2024 and CBO projections for 2026.

[[link removed]] Congressional
Budget Office, “Historical Budget Data and Revenue Projections by
Category,”, January
2025, [link removed].

[[link removed]] Richard
Kogan _et al.,_ “More Revenue Is Required to Meet the Nation’s
Commitments, Needs, and Challenges,” CBPP, June 17,
2024, [link removed].

[[link removed]] Rachel
Ensign, “The U.S. Economy Depends More Than Ever on Rich People,”
Wall Street Journal, February 25,
2025, [link removed].

[[link removed]] Marr,
“Yet Another Estate Tax Cut on Massive Inheritances Is a Poor
Choice,” _op. cit._, and Jacoby, _op. cit._

[[link removed]] Department
of the Treasury, Office of Tax Analysis, “The Cost and Distribution
of Extending Expiring Provisions of the Tax Cuts and Jobs Act of
2017,” January 10,
2025, [link removed].
Treasury’s analysis reflects the Biden Administration’s pledge not
to raise taxes for people making up to $400,000 a year. Its estimates
of reversing the tax cuts for people with incomes above $400,000
include certain tax changes that would modestly increase tax rates for
households in the top 1 percent (those with incomes over $743,247)
relative to allowing all the tax cuts to fully expire. For example,
the 2017 tax law’s revenue-raising provisions are assumed to be
extended for all income levels rather than being allowed to expire.

[[link removed]] The
Budget Lab at Yale, “State of U.S. Tariffs: April 15,
2025,” [link removed] ;
Shalanda Young, “The 2025 Mid-Session review,” the White House,
July 19,
2024, [link removed].

[[link removed]] Treasury
Office of Tax Analysis, _op. cit._

[[link removed]] The
January 2024 House-passed expansion of the Child Tax Credit included
provisions that would have made the credit more available to children
in families with low and moderate incomes — providing the credit on
a per-child basis and eventually eliminating the refundability cap.
(See “Child Tax Credit” section above for details.) We estimate
the marginal cost of implementing these provisions for ten years
(2026-2035), assuming that the extension of the 2017 tax law changes
to the Child Tax Credit would be accounted for elsewhere, using the
2015 IRS Statistics of Income Public Use File. The January 2024
expansion also included a provision to index the maximum credit and
refundability cap amounts to inflation, which would add roughly $190
billion over ten years.

[[link removed]] The
estimate of an extension of enhanced Premium Tax Credits is from
Congressional Budget Office, “Budgetary Outcomes Under Alternative
Assumptions About Spending and Revenues,” May 8,
2024, [link removed]; the estimate of the EITC
is from Department of Treasury, “General Explanations of the
Administration’s Fiscal Year 2025 Revenue Proposals,” March 11,
2024,
[link removed]…
[[link removed]].
All estimates are for 2026-2035.

[[link removed]] Chuck
Marr, George Fenton, and Samantha Jacoby, “Congress Should Revisit
2017 Tax Law’s Trillion-Dollar Corporate Rate Cut in 2025,” CBPP,
March 21,
2024, [link removed].

[[link removed]] Prior
to the debate around the 2017 tax law, business groups supported a 25
percent corporate tax rate — in line with the OECD average. See
Laura Tyson, “Modernizing Corporate Taxation,” Alliance for
Competitive Taxation, June 26,
2013, [link removed].

[[link removed]] Treasury
Department, “General Explanations of the Administration’s Fiscal
Year 2025 Revenue Proposals,” ; Joint Committee on Taxation,
“Description of the Revenue Proposals Contained in the President’s
Fiscal Year 2025 Budget Proposal,” JCS-1-24, November 22,
2024, [link removed]. For proposals
in the Biden-Harris Administration’s fiscal year 2025 budget,
revenue estimates are for the decade from 2025-2034.

[[link removed]] Chuck
Marr and Samantha Jacoby, “Policymakers Should Focus on the True
Cost of an Item on Corporate Lobby’s Tax Break Wish List,” CBPP,
November 7,
2023, [link removed].

[[link removed]] Kimberly
A. Clausing, “Lessons from the 2017 Tax Law for the Future of U.S.
Corporate Taxation,” CBPP, October 17,
2024, [link removed].

[[link removed]] “2017
Law’s International Tax Provisions Also Need Revision,” in Marr,
Fenton, and Jacoby, _op.
cit.,_ at [link removed].

[[link removed]] Treasury
Department, “General Explanations of the Administration’s Fiscal
Year 2025 Revenue Proposals,” .For analysis, see Clausing, _op.
cit_.

[[link removed]] Chuck
Marr and Samantha Jacoby, “Principles for the 2025 Tax Debate: End
High-Income Tax Cuts, Raise Revenues to Finance Any Extensions or New
Investments,” CBPP, September 25,
2024, [link removed].

[[link removed]] High-income
taxpayers are also subject to a 3.8 percent surtax (known as the net
investment income tax) on capital gains and certain other forms of
unearned income.

[[link removed]] Treasury
Department, “General Explanations of the Administration’s Fiscal
Year 2025 Revenue Proposals.”

[[link removed]] _Ibid._

[[link removed]] _Ibid._

[[link removed]] CBPP,
“Chart Book: The Need to Rebuild the Depleted IRS,” CBPP, revised
December 16,
2022, [link removed].

[[link removed]] Kayla
Williams, “Tax Day Highlights IRS Progress and Need to Protect and
Replenish Funding,” CBPP, April 10,
2024, [link removed].

[[link removed]] IRS,
“U. S. Department of the Treasury, IRS announce $1.3 billion
recovered from high-income, high-wealth individuals under Inflation
Reduction Act initiatives,” September 6,
2024, [link removed].

[[link removed]] Treasury
Inspector General for Tax Administration, “Quarterly Snapshot: The
IRS’s Inflation Reduction Act Spending Through September 30,
2024,” March 10,
2025, [link removed].

[[link removed]] Josephine
Cureton, “On Tax Day, Reject DOGE-Led Cuts to the IRS Workforce and
Budget,” CBPP, April 10,
2025, [link removed].

[[link removed]] Aaron
Navarro, “IRS could cut up to 40% of workforce, memo indicates,”
CBS News, April 15,
2025, [link removed].

[[link removed]] Jacob
Bogage and Shannon Najmabadi, “IRS starts mass layoffs, with 7,000
expected to lose their jobs,” Washington Post, February 20,
2025, [link removed].

[[link removed]] Marshall
Cohen and Rene Marsh, “About 25% of IRS workers planning to take
buyout offer,” CNN, April 15,
2025, [link removed].
Staff cuts of 25 percent includes the 4,700 employees who reportedly
took the initial option to retire offered by DOGE in February. Erin
Slowey and Erin Schilling, “IRS to Lose 20% of Workforce to New
Trump Resignation Offer,” Bloomberg Law, April 15,
2025, [link removed].

[[link removed]] William
C. Boning _et al._, “A Welfare Analysis of Tax Audits Across the
Income Distribution,” NBER Working Paper 31376, June
2023, [link removed].

[[link removed]] The
Budget Lab at Yale, “The Revenue and Distributional Effects of IRS
Funding,” updated March 14,
2025, [link removed].

[[link removed]] Chuck
Marr, “Targeting the IRS Shows DOGE’s Stated Purpose Is Just a
Pretext,” Bloomberg Law, March 19,
2025, [link removed].

[[link removed]] The
Biden-Harris Administration’s 2025 budget would provide an
additional $104.3 billion in mandatory funding for the IRS in
2025-2034. Treasury estimates this would increase federal revenues by
$341 billion over the samee period, for a net revenue increase of
$236.7 billion.

_Chuck Marr [[link removed]]_

_Areas of Expertise_

_Federal Budget [[link removed]]_

_Federal Tax [[link removed]]_

_Recent Work:_

*
_What a Better Tax Bill Would Look Like
[[link removed]]_

*
_Yet Another Estate Tax Cut on Massive Inheritances Is a Poor Choice
[[link removed]]_

*
_House Republican Budget’s $4.5 Trillion Tax Cut Doubles Down on
Costly Failures of 2017 Tax Law
[[link removed]]_

_Samantha Jacoby
[[link removed]]_

_Areas of Expertise_

_Federal Budget [[link removed]]_

_Federal Tax [[link removed]]_

_Recent Work:_

*
_What a Better Tax Bill Would Look Like
[[link removed]]_

*
_Congress Should End Pass-Through Tax Break for Millionaire Business
Owners, Extend Tax Credit That Helps Small Business Owners Buy Health
Coverage
[[link removed]]_

*
_Attacks on Greenhouse Gas Reduction Fund Are Misguided and Misleading
[[link removed]]_

_Kris Cox [[link removed]]_

_Areas of Expertise_

_Federal Tax [[link removed]]_

_Tax Credits for Individuals and Families
[[link removed]]_

_Recent Work:_

*
_What a Better Tax Bill Would Look Like
[[link removed]]_

*
_IRS-ICE Agreement Weakening Privacy Protections Poses Risks for All
Taxpayers
[[link removed]]_

*
_Policymakers Should Expand the Child Tax Credit for the 17 Million
Children Currently Left Out of the Full Credit
[[link removed]]_

_Stephanie Hingtgen
[[link removed]]_

_Recent Work:_

*
_What a Better Tax Bill Would Look Like
[[link removed]]_

*
_Policymakers Should Expand the Child Tax Credit for the 17 Million
Children Currently Left Out of the Full Credit
[[link removed]]_

*
_House-Passed Bipartisan Tax Bill’s Child Tax Credit Expansion Would
Especially Help Children Living in Rural Areas
[[link removed]]_

_ABOUT THE CENTER ON BUDGET AND POLICY PRIORITIES_

* _WHO WE ARE_
_We are a nonpartisan research and policy institute that advances
federal and state policies to help build a nation where everyone —
regardless of income, race, ethnicity, sexual orientation, gender
identity, ZIP code, immigration status, or disability status — has
the resources they need to thrive and share in the nation’s
prosperity._

_WHAT WE DO_

_We combine rigorous research and analysis, strategic communications,
and effective advocacy to shape debates and affect policy, both
nationally and in states._

_We work closely with a broad set of national, state, and community
organizations to design and advance policies that promote economic
justice; improve health; broaden opportunity in areas like housing,
health care, employment, and education; and lower structural barriers
for people of color and others in communities that continue to face
systemic barriers to opportunity._

_We promote federal and state policies that will build a stronger,
more equitable nation and fair tax policies that can support these
gains over the long term. We also show the harmful impacts of policies
and proposals that would deepen poverty, widen disparities, and worsen
health outcomes._

_We work on policy implementation at the federal, state, and local
levels to maximize the positive impact of policies and bring the
lessons learned on the ground back to the policymaking process in
Washington, D.C. and state capitals._

_Our work — rooted in sound research and original data analysis,
informed by our extensive knowledge of policy and how programs operate
on the ground, and strengthened by our collaboration with a broad
range of partners — is trusted by a wide range of researchers,
policymakers, and media._

_OUR HISTORY_

_In 1981, Robert Greenstein
[[link removed]] founded the
Center on Budget and Policy Priorities (CBPP) to analyze federal
budget priorities, with a particular focus on how budget choices
affect people with low incomes. In the Center’s early years, we
focused on federal budget and tax issues, nutrition programs, and
income assistance. Our work has broadened considerably over time and
now includes research and advocacy on a wide range of issues including
health care, housing, and the economic and health security of people
who immigrated to the U.S._

_Recognizing the critical role that state policy plays in economic and
health security, we began extensive work on state-level policies in
the 1990s. We founded — and continue to coordinate and foster —
the State Priorities Partnership, a network of high-impact policy and
advocacy organizations that now stretches across more than 40 states,
Puerto Rico, and the District of Columbia. Sharing with the Center a
strong emphasis on designing and promoting policies that foster
economic, health, and racial justice, these independent nonprofit
organizations collaborate with a host of partners in their states to
shape policy debates._

_OUR IMPACT_

_Over the last four decades, the Center has played a significant role,
in collaboration with partners around the country, in major advances
in economic and health security policies nationally and in states._

_We have helped protect and expand health coverage for millions of
people, extend and expand refundable tax credits that lift millions
above the poverty line, and strengthen nutrition, housing assistance,
and income support to help people afford basic needs. These policies
improve people’s near-term well-being; promote equity across lines
of race, ethnicity, immigration status, and gender; and have long-term
payoffs for them and the country as a whole._

_When the Center was founded in 1981, economic security programs
lifted just 20 percent of people who would otherwise be poor above the
poverty line. Prior to the pandemic in 2019, that figure had more than
doubled to 46 percent; economic security programs lifted 34 million
people above the poverty line that year, reducing the poverty rate
from 22.8 percent to 12.2 percent. In 2020, during the pandemic and
its economic fallout, economic security programs and temporary
COVID-19 relief measures increased the number of people kept above the
poverty line substantially to 53 million. Advances in economic
security programs have reduced poverty across racial and ethnic groups
while also narrowing disparities significantly, though large gaps
remain._

_Similarly, expansions we helped to drive in Medicaid and the
Affordable Care Act’s (ACA) subsidized coverage through federal and
state marketplaces have changed the landscape of health coverage. In
the early 1980s, Medicaid was small, the Children’s Health Insurance
Program (CHIP) didn’t exist, and most people in low-paid jobs had no
access to affordable coverage unless their employer provided it. Prior
to the pandemic, some 81 million people — 25 percent of the U.S.
population — received coverage through Medicaid, CHIP, or the ACA
marketplaces._

_State Priorities Partnership groups have secured important policy
advances across the country. Among other victories, over the past
several years, Partnership groups have helped to raise or protect
roughly $40 billion in state revenue to support a range of
investments, such as in education, health care, and infrastructure;
have contributed to adoption of the ACA’s Medicaid expansion in a
number of states; and have worked toward new or expanded state
refundable tax credits in more than a dozen states, Puerto Rico, and
the District of Columbia, expanding state earned income tax credits by
more than $1 billion and increasing their reach to millions more
households._

_The Center is also helping to build the next generation of state
policy leaders through the State Policy Fellowship program
[[link removed]].
This program brings dynamic emerging leaders who know the challenges
faced by communities of color, LGBTQ people, immigrants, tribal
communities, and families with low incomes to Partnership groups and
the Center by offering them two-year paid positions as policy
analysts, as well as other supports, training, and networking
opportunities._

Donate to the Center on Budget and Policy Priorities
[[link removed]]

* Federal Budget
[[link removed]]
* taxes
[[link removed]]
* Health Care
[[link removed]]
* food assistance
[[link removed]]
* College support
[[link removed]]
* Child Tax Credit
[[link removed]]
* pandemic assistance
[[link removed]]
* Inequality
[[link removed]]

*
[[link removed]]
*
[[link removed]]
*
*
[[link removed]]

 

 

 

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