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WASHINGTON, DC – MARCH 04: U.S. Vice President JD Vance and Speaker of the House Mike Johnson (R-LA) … More applaud as U.S. President Donald Trump addresses a joint session of Congress at the U.S. Capitol on March 04, 2025 in Washington, DC. President Trump was expected to address Congress on his early achievements of his presidency and his upcoming legislative agenda. (Photo by Win McNamee/Getty Images) Getty Images During his campaign, President Trump promised to create a “beautiful golden age of business” by reducing inflation, lowering taxes, and cutting government spending. The budget reconciliation bill working its way through Congress could help Trump achieve this goal, but the current version falls short. Some additional reforms to Medicaid and the state and local tax (SALT) deduction coupled with changes to the way businesses deduct investment expenses would improve the bill and the economy. The Tax Foundation estimates that the current tax bill would boost GDP by 0.6% but cause wages to decline by 0.1%. This is hardly the pro-growth tax reform Trump promised. The Tax Foundation estimates that making the 2017 Tax Cuts and Jobs Act (TCJA) permanent, so just extending Trump’s tax cuts from his first term, would increase GDP by 1.1% and wages by 0.5% while also adding 847,000 jobs. One of the differences between the two tax plans is how they treat the expensing of business investment. The TCJA allowed businesses to expense the full cost of short-lived investments such as tools and equipment in the year purchased from 2018 to 2021. After 2021, the amount businesses could expense declined annually and will phase out completely in 2027, reverting to the old depreciation schedules. The current bill brings back full expensing, but only until 2029. Making full expensing permanent would eliminate the tax penalty imposed on capital…

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Filed under: News - @ May 16, 2025 10:28 pm