Project 2025, the right-wing policy blueprint led by the Heritage Foundation and co-authored by more than 100 former Trump administration staffers, has been criticized on several counts. Tax proposalsThat includes big cuts to corporate tax rates and capital gains taxes that would benefit wealthy Americans, but a research group warned Wednesday that one economic policy that has received little attention could “significantly increase” economic hardship for millions of working families.
EPI Action is a nonpartisan research and advocacy group affiliated with the Economic Policy Institute. Published Analysis of the proposals presented on page 7 of Project 2025 Section on the Ministry of FinanceIts authors include at least two who served on Republican presidential nominee Donald Trump’s campaign and transition team during his tenure.
The proposal calls for taxing employers on workplace benefits that cost more than $12,000 per employee per year, which would undoubtedly “lead employers to cut back on these benefits,” wrote Josh Bivens, chief economist at EPI Action.
Based on the fact that more than 150 million Americans have health insurance benefits provided through their employers, Bivens concluded that more than 15 million workers’ benefits would be taxed under the Project 2025 plan.
Collectively, these workers could pay more than $12 billion in taxes if employers stop offering benefits as a cost-cutting measure.
“In the best case, employers would switch compensation from tax-advantaged benefits to taxable wages and salaries, increasing the taxes workers pay. In the worst case, employers would simply cut benefits without making an offsetting increase in wages and salaries.”
Under the proposal, “at best, employers would switch compensation from tax-advantaged benefits to taxable wages and salaries, increasing the taxes workers pay,” Bivens wrote. “At worst, employers would simply cut benefits without an offsetting wage or salary increase.”
The analysis explains that currently, employers can count wages and benefits as company expenses and deduct all wages and other employee benefits when calculating taxes owed, but under the policy, expenses over $12,000 will no longer be deductible and “the provision of this coverage will cease.”
The policy could particularly cut employer-sponsored health insurance, Bivens said.
Currently, about 13% of employee compensation in the United States is in the form of employer-provided non-wage benefits (not including mandatory contributions to social insurance such as Social Security and Medicare, or the value of paid vacation). About two-thirds of these non-wage benefits are employer contributions to health insurance. Employer-provided health insurance is the predominant form of insurance in the United States., Over 150 million people get their health insurance through their employer’s plan (including dependents who are covered under someone else’s plan). If employers start being taxed on these benefits, they will be less and less likely to offer them in the future.
The proposal would be “harmful” to millions of families who rely on employer-sponsored health insurance for one working adult to cover their children and other dependents.
“For example, in a dual-income household with young children, where one breadwinner works part time to devote more time to child care, the part-time breadwinner is highly unlikely to qualify for employer-sponsored insurance (which employers typically require full-time work), and so the family must rely on the full-time breadwinner’s coverage in a family health insurance plan,” Bivens wrote. “Thus, Project 2025 would significantly increase hardship for such families.”
The plan would also prohibit employers from deducting the costs of family health insurance plans covering dependents over the age of 23. Bivens said this is a clear attempt to “repeal one of the most popular provisions of the Affordable Care Act (ACA) – allowing children to stay on their parents’ family health insurance plans until age 26.”
Bivens stressed that the proposal is not new and reflects “longstanding policy efforts by conservatives to reduce the generosity of our health insurance programs.”
The Republican Study Committee, the largest conservative group in the House of Representatives, called for a tax on employer-provided benefits in its budget proposal earlier this year.
“Seek to dismantle the public safety net of employer-provided benefits and health insurance is not an idiosyncratic feature of Project 2025 but a central goal of the conservative policymaking ecosystem,” Bivens wrote.
While President Trump and his running mate, Sen. J.D. Vance (R-Ohio), have sought to distance themselves from Project 2025, Bivens noted that the Trump campaign expressed “enthusiastic support” for the policy agenda in meetings with the Heritage Foundation. A common dream Reports last week said President Trump flew on a private jet with Heritage Foundation president Kevin Roberts in 2022.
“Candidates may claim that Project 2025 doesn’t affect them, but the organized conservative base of the corporate class got everything it wanted in the first Trump administration,” Bivens wrote. “There’s no reason to expect it will be different this time.”
Whether the plan to tax employee benefits, as included in Project 2025, is enacted by a second Trump administration or is the result of a “long-running campaign by conservative policymakers to shift costs to families” rather than employers, Bivens writes, the plan’s outcome is clear: “American workers would lose out on important family-supporting benefits and face higher taxes.”
