According to a recent analysis by the Congressional Budget Office (CBO), President Trump’s tax policy might increase the national debt by approximately $3.8 trillion.
The tax measures included in the House GOP’s proposal, aimed at advancing Trump’s domestic agenda, could potentially lower federal revenue by about 10% over the next ten years compared to the current national debt, as noted by the CBO.
Republicans in the House are racing to finalize and pass a comprehensive policy bill to mark an anniversary, intending to solidify Trump’s 2017 tax cuts and broader GOP initiatives ahead of Independence Day.
This legislation seeks to extend the 2017 cuts on personal income tax rates and introduce new tax credits related to loan tips, social security benefits, overtime pay, and interest for US-made vehicles.
Additionally, the proposal aims to reinstate business tax deductions for research and development expenditures and lower income tax rates for “pass-through” entities, which pass tax responsibilities to their owners.
For Republican lawmakers, extending these tax cuts and delivering on Trump’s campaign commitments remains crucial, especially with the 2026 midterm elections approaching and voter relief being a priority.
Nonetheless, the bill encounters significant hurdles, partly due to contentious provisions meant to safeguard taxpayers in affluent regions.
A bloc of five House Republicans from high-tax suburban areas have pledged to oppose the bill unless there is an increase in the proposed cap for the state and local tax (SALT) deduction, currently set at $30,000. Some Republicans, including Rep. Mike Lawler (RN.Y.), may risk losing their positions in the upcoming 2026 elections.
While this group has reported some progress in discussions with House leaders, certain fiscally conservative Republicans are staunchly against making compromises that would have minimal repercussions in heavily Republican districts.
Even if House Republicans manage to unify behind the bill, their counterparts in the Senate seem inclined to divide the package into smaller components. This approach could lead to tensions among Republicans in both chambers, particularly as Congress faces a summer deadline to address the debt ceiling.
