Lone Candle
Champion of Truth
“Special tax breaks for venture capitalists, Alaskan fisheries, spaceports, private schools, rum makers and others — together costing tens of billions of dollars — quietly caught a ride on Republicans’ sprawling domestic policy megabill.”
Pork pork pork. Where’s the tea party!?
https://www.politico.com/news/2025/07/04/from-rum-to-gun-silencers-tailored-tax-breaks-add-billions-to-megabill-00438962
“The sprawling measure — which at its core was really one big, beautiful tax extender — was never about those tax rates or Medicaid or the deficit. The underlying legislation was no bill at all, but a referendum on Trump. And that left congressional Republicans a binary choice that also had nothing to do with the policy therein: They could salute the president and vote yes and or vote no and risk their careers in a primary.”
https://www.politico.com/news/magazine/2025/07/04/republicans-megabill-vote-jonathan-martin-column-00439333
“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.”
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“Trump’s One Big Beautiful Bill is not an exercise in tax simplification.
Instead, it began with a push to extend the party’s 2017 tax cuts — which despite some streamlining also introduced some complexity — 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 a bigger pile of tax breaks.”
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“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.”
https://www.politico.com/news/magazine/2025/07/05/trump-tax-cuts-megabill-republicans-00439787
A “Big, Beautiful” Tax Bill for America’s Ultrawealthy | Prof G Markets
https://www.youtube.com/watch?v=6W_ZdTfqozE
“”Americans are continuing to leave high-tax, high-cost-of-living states in favor of lower-tax, lower-cost alternatives. Of the 26 states whose overall state and local tax burdens per capita were below the national average in 2022 (the most recent year of data available), 18 experienced net inbound interstate migration in FY 2024,” Katherine Loughead wrote last week for the Tax Foundation. “Meanwhile, of the 25 states and DC with tax burdens per capita at or above the national average, 17 of those jurisdictions experienced net outbound domestic migration.””
https://reason.com/2025/01/15/americans-continue-migrating-from-high-tax-to-low-tax-states/
“Extending the individual income tax portions of the Tax Cuts and Jobs Act (TCJA) is supposed to be a good thing, right? After all, who doesn’t love lower taxes? However, data from the Congressional Budget Office (CBO) predicts that, without accompanying spending cuts, these tax cuts are going to cost the government.
If the cuts continue, it’s possible that “the positive effects of lower taxes would be counteracted by the negative effects of higher debt,” according to a Tuesday report from the Committee for a Responsible Federal Budget (CRFB).
“Despite claims that tax cuts pay for themselves,” the CRFB adds, “analyses from across the political spectrum have found that the economic effects of extending the expiring parts of the Tax Cuts and Jobs Act (TCJA) would offset 1 to 14 percent of the revenue loss – falling well short of the 100 percent needed to pay for itself.”
While the tax cuts would create an economic boost in the short term, increasing gross domestic product (GDP) by around 0.3 percent in 2027 and 2028, the CRFB predicts that the cuts will actually lower projected GDP by 0.08 percent by 2034. Further, the CBO’s data shows that continuing TCJA tax cuts are likely to lead to increasing interest rates over the next decade.
While continuing the cuts “would produce about $90 billion of positive revenue feedback,” according to the CRFB, “those higher interest rates would add $150 billion to the debt, more than counteracting the revenue gains.””
https://reason.com/2024/12/12/keeping-these-tax-cuts-is-a-bad-expensive-idea/
“The rationale behind capping the SALT deduction was that it would disproportionally benefit high-income earners in high-tax states—and it did. In effect, the federal government was subsidizing the tax-and-spend policies of these states by shielding residents from the full impact of local tax increases. If California raised its taxes, the SALT deduction softened the blow for taxpayers.”
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“raising the cap on SALT deductions would ease pressure on blue states to simplify or lower their tax rates. Consider that California’s top marginal rate is a whopping 13.3 percent. When combined with a top federal rate of 37 percent, Golden State residents are approaching a Sweden-level tax rate. Meanwhile, seven states impose no state income tax at all. This dynamic highlights the beauty of the American political system—the states compete for talent and resources. Over time, high-tax states will lose capital, and low-tax states will benefit.
It’s difficult to oppose any proposal that lowers taxes, but an exception applies here. Raising the SALT cap would only reward high-tax states for their fiscal irresponsibility while undermining the competitive pressures that drive reform. Cities like Nashville, Austin, and Miami are thriving as new hubs of innovation precisely because they’ve embraced freedom and pro-growth policies. They’ve earned their success—and that’s the lesson high-tax states need to learn.”
https://reason.com/2024/12/18/raising-the-salt-cap-is-a-gift-to-high-tax-states/
“exempting tips from income taxes would increase the deficit, create some weird economic incentives, and unfairly cut taxes for a small subset of workers while not doing much to help the majority of Americans or grow the economy.”
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“Alex Muresianu, a senior policy analyst at The Tax Foundation, spells out in detail why that’s the case. He compares two hypothetical low-income service sector workers: a cashier and a waitress, both of whom earn $34,000 annually. Under the current tax code, both have the same baseline tax liability (roughly $2,000) even though about half of the waitress’s earnings are via tips.
If those tips are exempted from income taxes, the cashier still owes that $2,000. The waitress, meanwhile, owes just $600.
Harris should have to explain why she thinks it’s fair to ask some low-income workers to pay tax bills that will be two or three times higher than other workers who earn the same amount—because that’s what she is proposing here.”
https://reason.com/2024/08/15/carving-out-a-tax-cut-just-for-tips-doesnt-make-more-sense-when-kamala-harris-does-it/
“The problem with tipped wages is not that they are taxed too heavily; it’s how little they tend to pay, and how much tipped workers have to rely on the kindness of strangers to make ends meet. In 2023, for example, the median annual wage for waiters was just below $32,000, according to the Bureau of Labor Statistics.
In fact, as the Tax Policy Center put it, eliminating income taxes on tips would do little, if anything, for many tipped workers whose earnings are so low that they are already exempt from paying federal income taxes.
“It’s very hard to dispute that the vast majority of moderate and low-wage workers are left out,” said Brendan Duke, senior director of economic policy at the Center for American Progress. “We know that 95 percent of low- and moderate-wage workers don’t get tips, and only about a third of those tipped workers pay income taxes and would benefit from this.” (Duke was specifically talking about Texas Senator Ted Cruz’s proposed legislation on this issue.)
Part of the reason that tipped workers are paid so poorly is that the federal government only guarantees them a subminimum wage of $2.13 per hour. If along with tips, a worker’s earnings are still below the federal minimum wage of $7.25 per hour, then employers have to make up the difference. (Many states and municipalities have wage requirements above the federal minimum, but those also often include carve-outs with lower hourly minimums for tipped workers.)
That’s why a handful of states have abolished the subminimum wage for tipped workers altogether. Because by allowing employers to pay tipped workers less, businesses essentially pass their payroll burden directly onto their customers. And while most Americans are used to paying tips, those who don’t — or those who at least threaten to not tip — create a hostile environment for workers and make it harder for employees to make a fair wage.”
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“One of the biggest concerns about doing away with federal taxes on tips is that it would discourage businesses from offering more competitive wages. That’s because if workers’ take-home pay increases because of a tax cut, employers wouldn’t need to provide tipped workers a higher base-line wage. In effect, it’s a tax cut that might mostly subsidize businesses’ payroll costs, not workers’ cost of living.
“It will reduce employers’ needs to raise wages,” Shierholz, of the Economic Policy Institute, said.
There’s also the fact that creating a tax carveout for tipped employees could create a major loophole for employers looking to pay people less. Some sectors, for example, can simply become part of the tipped economy, making more of their workers rely on tips rather than a minimum wage.
The policy would “incentivize employers to have more workers be in tipped occupations,” Shierholz said. “[Employers] could reduce the base wages they pay their workers under the guise of doing something for the workers. They could say, ‘We’re making you tipped because you won’t have to pay taxes’ and then in the fine print, it’s like, ‘Oh also, you’re going to be making $2.13 an hour in base wages.’”
That’s why pursuing other policies, like abolishing the subminimum wage, would do much more to increase workers’ pay than eliminating taxes on tips would. The poverty rate for tipped workers in states without a subminimum wage, for example, is lower than that in states with a subminimum wage.
“If you really want to help tipped workers, there are other ways that are far, far better,” Shierholz said, adding that federal dollars would be better directed toward programs like the Child Tax Credit or the Earned Income Tax Credit, which would be much better at targeting workers who need it.
So if politicians are looking to tout a pro-worker agenda, they should point to policies that can actually raise people’s wages, as Harris did by also endorsing raising the minimum wage. Otherwise, they might just be pushing for yet another tax cut for the rich. After all, that might be why major business lobbying groups have endorsed “no tax on tips” — to avoid actually raising workers’ wages.”
https://www.vox.com/policy/366680/no-tax-on-tips-trump-harris-subminimum-wage
“Harris is proposing policies like raising taxes on corporations and creating new tax credits, while Trump promises to institute new tariffs and to cut taxes on certain businesses. There’s not a lot the two agree on, other than a proposal to eliminate federal taxes on tips.
As president, both candidates would struggle to make their promised changes unilaterally as taxation is controlled by Congress, not the executive branch. Neither party seems on track to make the type of huge House or Senate gains a president would need to ram their agenda through Congress, and it’s possible control continues to be split between parties, a recipe for gridlock.
That makes these plans more about demonstrating an economic philosophy to voters than anything else.”
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“Harris has said she wants to:
Set the capital gains tax rate at 28 percent
Set the corporate tax rate at 28 percent
Give new small businesses a tax break of up to $50,000
Create a $25,000 tax credit for first-time homebuyers
Increase the child tax credit for all parents, including giving new parents a $6,000 credit
Eliminate certain taxes on tips
Ensure no tax hikes on individuals making less than $400,000”
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“Trump says he plans to:
Slash some corporate taxes to 15 percent
Institute a tariff of up to 20 percent on all imports (except those from China, which would have a 60 percent tariff)
Renew the individual tax cuts from 2017, keeping even the highest income tax brackets where they are
Get rid of taxes on Social Security benefits
End taxes on tips”
https://www.vox.com/2024-elections/370753/taxes-debate-trump-harris-irs-tariffs-child-tax-credit