Tax Refund

A policy agenda developed by influential conservative groups for a second Donald Trump presidential term already has received attention for its controversial immigration recommendations. But the plan, called Mandate for Leadership, also includes far-reaching tax and economic initiatives, including a shift to a consumption tax and greater White House control of the IRS.   

The umbrella group Project 2025 was organized by the Heritage Foundation and claims to represent the views of about 100 conservative organizations that form its advisory board.

Authors include Stephen Moore, an oft-quoted source of fiscal and monetary policy advice in Trump’s first term, and Russell Vought, who was Trump’s budget director and is considered a potential White House chief of staff in a second term.  

Road To A Consumption Tax  

Tax policy was far from a top priority for Trump in his first term. While his Administration backedand took credit for—the 2017 Tax Cuts and Jobs Act (TCJA), much of the heavy lifting was done by congressional Republicans. And Trump himself declared the issue “boring,” famously tossing away a prepared speech intended to kick off a victory lap after the bill’s passage.    

However, because the individual provisions of the TCJA expire at the end of 2025, the president and Congress inevitably will have big choices to make. The nearly 1000-page Mandate calls for dramatic changes. Rather than extending the TCJA, it would shift to a consumption tax in two steps.

A Transition Tax

First, it would replace the current revenue system with one built on individual income tax rates of 15 percent and 30 percent, with an unspecified standard deduction. The top bracket would kick in at the Social Security wage base, currently $168,600.

“Most deductions, credits and exclusions” would be repealed, though only a few are identified. For example, taxpayers could no longer deduct any state and local taxes or educational expenses. At the same time, nonresident parents with child support orders could claim a new credit.

Capital gains and dividends would be taxed at 15 percent. The 3.8 percent Net Investment Income Tax would be repealed. Taxpayers could contribute up to $15,000 (adjusted for inflation) of after-tax earnings into Universal Savings Accounts. Earnings from account assets could be withdrawn tax-free.

The estate and gift tax rate would be capped at 20 percent, and the TCJA’s temporary exemption amount of $12.9 million (adjusted for inflation) would be permanent.

The corporate income tax rate would be cut from 20 percent to 18 percent. All capital investment could be deducted in the year it is made.

For multinational corporations, the plan would repeal the TCJA’s base erosion anti-abuse tax (BEAT) and lower the tax on global intangible low-taxed income (GILTI) to 12.5 percent or less. It also would end US participation in multilateral efforts to reform corporate income taxes.

More Trump Tariffs

In a separate section on trade, written by first-term Trump aide Peter Navarro, the plan proposes two alternatives. In one, the US would match its taxes on foreign imports to those the exporting country imposes on US goods. The second would be a border adjustment tax, similar to what Congress debated but rejected in 2017.

Employers could deduct no more than $12,000 annually per employee in most non-wage benefits, including employer-sponsored health insurance. The limit would not be increased for inflation. However, retirement account contributions and a share of Health Savings Account contributions would be exempt from the cap.

A supermajority vote of Congress would be required to raise individual or corporate tax rates.  

The outline calls this tax regime a stop on the way to a pure consumption tax, but says the ultimate system could be a national sales tax, a business transfer tax, a flat tax, or a cash flow tax.

Political Control Of The IRS

The plan also proposes dramatic changes in government operations, including tax administration. It would increase the number of political appointees at the IRS and freeze its budget at current levels.

More broadly, it would centralize control of the federal bureaucracy in the White House, freeze hiring, and give the president broad authority to fire federal workers. It calls for the creation of “lists of…policy-determining, policymaking, or policy-advocating positions” and procedures to replace career civil servants who hold those jobs.

The plan would consolidate The Bureau of Economic Analysis, the Census Bureau, and Bureau of Labor Statistics into a single office, would “align [their] mission with conservative principles,” and urges a second Trump Administration “maximize hiring of political appointees” in statistical positions.

While far less specific, Trump’s campaign also website also calls for a “top-to-bottom overhaul of the federal bureaucracies to clean out the rot and corruption of Washington D.C.” But he’s said little about taxes, beyond pledges to raise tariffs for all imports and to cut the corporate tax rate. More recently, he endorsed making the TCJA permanent. Would he embrace these more ambitious ideas?


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