Trump Megabill Faces Uphill Battle As House GOP Scrambles - The Source with Kaitlan Collins - Podcast on CNN Podcasts
Narrowly passing the Senate, President Trump's domestic policy bill is now in the hands of the House and there are signs of trouble ahead.
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Yahoo
25 minutes ago
- Yahoo
Will Trump's big tax bill help or hurt you? Why it could depend on your income
President Donald Trump's tax bill could make future generations "worse off," no matter their income, according to a new report from the Penn Wharton Budget Model. Like other analyses, the nonpartisan research initiative's latest findings suggest most Americans would see tax cuts, with high-income households – which tend to pay more taxes – seeing the largest gains. Long-term, though, the Penn Wharton Budget Lab's July 1 report projects lifetime losses for all income brackets. "It's still higher-income households that are the winners, especially those who are alive today," said Kent Smetters, faculty director of the Penn Wharton Budget Model. The analysis also found the Senate's version of the tax bill, which narrowly passed on July 1, would lead to higher deficits and slower economic growth compared to its counterpart from the House. The bill heads to the House for final approval. Trump has asked for a final version on his desk and ready for signature by July 4, but acknowledged the deadline may be "very hard to do" as some House Republicans voice frustrations with changes made in the Senate. Trump's big tax bill is a win. It could also be a big problem for GOP The legislation, dubbed the 'One, Big Beautiful Bill' by Trump, would make the 2017 tax cuts from Trump's first term permanent, increase the child tax credit and introduce other tax cuts, including no taxes on tips or overtime wages. To help pay for the cuts, the government would reduce spending on the Supplemental Nutrition Assistance Program, formerly known as food stamps, and make cuts to Medicaid, a program that provides health insurance to more than 71 million low-income Americans. The version in the Senate has some key differences from the House bill, including: Permanent tax breaks for corporations that allow businesses to deduct the full cost of qualifying investments and research projects immediately, rather than over a number of years. In the House's bill, these tax breaks were in effect from 2025 to 2029. Permanently enhancing the standard deduction, adding $750 for single filers, $1,125 for heads of households and $1,500 for married couples starting in 2025. There was a temporary adjustment in the House's version that added $1,000 for single filers, $1,500 for heads of households and $2,000 for couples from 2025 to 2028. Permanently raising the child tax credit to $2,200 starting in 2026, compared to a temporary increase to $2,500 through 2028 in the House bill. "The Senate one makes things more permanent," Smetters told USA TODAY. "On the one hand, we don't have to revisit the same politics in four years. On the other hand, there's a fiscal cost associated with that. That means more debt and more burdens inherited by future generations." More Americans would also lose Medicaid under the Senate's version, according to the nonpartisan Congressional Budget Office, with an estimated 11.8 million people uninsured by 2034, compared to previous estimates of 10.9 million people under the House's proposal. 5 takeaways: Trump asserts dominance with 'big, beautiful bill' Senate passage Various analyses suggest Trump's tax bill would reward higher-earning Americans more than their lower-earning counterparts. A June analysis of the House bill by the Congressional Budget Office, for instance, found resources for the poorest would decrease by about $1,600 per year under the legislation, largely due to cuts to Medicaid and food aid ‒ which would be more aggressive under the Senate bill. Meanwhile, the wealthiest would gain about $12,000 on average. Another June report from the Yale Budget Lab suggests the bottom fifth of earners would lose about $560 per year while the top 20% would gain $6,000. But all future generations, no matter their income, would experience lifetime losses, according to the Penn Wharton Budget Model. High-income households are set to lose $5,700 under the Senate's bill, while low-income households would lose $22,000. The report points to a reduced social security net and lower wages as the main drivers. Under the House bill, the Penn Wharton Budget Model projected lifetime losses ranging from $500 for high-income households to $15,800 for low-income households. "The future generations, they're going to be worse off. It doesn't matter where on the income bracket they fall," Smetters said. "Ultimately, someone has to pay for (the tax bill), and we're basically passing it on to the next generation." While the House version showed a 0.4% gain in GDP by year 10, according to the Budget Model's previous analysis, the Senate's version would yield a 0.3% loss. After 30 years, GDP would drop 4.6% under the Senate bill compared to a 1.5% drop under the House version. Primary deficits are projected to increase $3.1 trillion over the next decade through the Senate's tax bill, compared to roughly $2.7 trillion under the House bill, according to the Penn Wharton Budget Model. Other reports have also found a higher debt load under the Senate bill. The Congressional Budget Office projects it would add $3.3 trillion to the national debt over the next decade, $800 billion more than the House's bill. And a July report from the Yale Budget Lab says the Senate's bill would add $3 trillion to the debt by 2034, compared to an estimated $2.4 trillion under the House bill. According to the most recent Penn Wharton Budget Model analysis, the lowest-earning households stand to lose after-tax-and-transfer income in both the short- and long-run, while higher earners would see gains under the Senate bill. Those earning less than $18,000 would lose $235 on average in 2027 and $1,380 by 2033. Those earning between $18,000 and $52,999 would lose $75 in 2027 and $1,625 by 2033. Those earning between $53,000 and $95,999 would gain $1,350 in 2027 but lose $130 by 2033. Those earning between $96,000 and $178,999 would gain $3,880 in 2027 and $2,825 by 2033. Those earning between $179,000 and $271,999 would gain $6,615 in 2027 and $4,985 by 2033. Those earning between $272,000 and $400,999 would gain $9,360 in 2027 and $7,670 by 2033. Those earning between $401,000 and $1,019,999 would gain $20,605 in 2027 and $18,645 by 2033. Those earning between $1,020,000 and $4,450,999 would gain $36,020 in 2027 and $29,430 by 2033. Those with an income above $4,451,000 would gain $290,485 in 2027 and $82,255 by 2033. Smetters said figures may be slightly adjusted as more information on specific amendments becomes available. This article originally appeared on USA TODAY: Will Trump's tax bill help or hurt you? It may depend on your income
Yahoo
26 minutes ago
- Yahoo
Trump's 'no tax on tips' is getting close to the finish line. Here's how it will work.
A "no tax on tips" proposal has broad support among politicians and Americans across party lines, though critics – including a restaurant trade group – warn the tax break could be costly and apply only to certain workers. The Senate on July 1 narrowly approved President Donald Trump's policy bill, which includes a provision that would make the president's 'no tax on tips' campaign promise a reality. The House started debating the legislation on July 2, and Trump has asked to have the bill ready to sign into law by July 4. Here's what we know so far about how "no tax on tips" could roll out and who would benefit. The Senate's version of the tax bill could create a temporary tax deduction for income from tips through 2028. Unlike the House bill, which is only offered to workers making less than $160,000 a year, the Senate version would decrease the deduction for workers making more than $150,000, rather than excluding them entirely. The Senate bill also caps deductions at $25,000. The bill also creates a new deduction for overtime pay through 2028. While the House version has no cap and applies only to workers making less than $160,000 per year, the Senate bill caps the deduction at $12,500 and decreases deductions for those making more than $150,000. Because the tax cut would not apply to payroll taxes, the roughly 37% of tipped workers who don't make enough to pay federal income taxes would see no benefits from the tax break, according to a 2024 estimate from the Yale Budget Lab based on 2022 tax figures. Erika Polmar, executive director of the Independent Restaurant Coalition, said the tax break would also be confusing and unfair for certain workers because it does not accommodate service charges, an alternative to tips. 'This bill is ultimately unfair to the line cooks, dishwashers, porters, and prep staff that are vital to independent restaurants,' Polmar said in a July 1 statement. "We urge Congress to amend the tax code so all gratuity-based income — tips and service charges — earns the same relief, giving businesses a single, stable set of rules." Polmar added that the tax break would be "costly to business owners and taxpayers alike.' The nonpartisan Congressional Budget Office projects that no taxes on tips could increase the deficit by $40 billion through 2028. There are also concerns that the tax break could exacerbate the country's tipping fatigue. The IRC statement points to a report from the Economic Policy Institute, a left-leaning think tank, that says the proposal could incentivize employers to lean even more heavily on tips. The bill has received praise from the National Restaurant Association, another industry trade group. The association is 'pleased to see' the inclusion of policies that deduct taxes on tips and overtime, according to Sean Kennedy, the group's executive vice president for public affairs. 'This bill includes the most important pro-growth tax policies restaurant operators need to continue to power the national economy,' Kennedy said in a July 1 statement. 'We appreciate the work that has gone into getting this bill through the Senate and encourage the House to quickly pass it, sending it to the President for signature.' Trump's tax bill: Will Trump's big tax bill help or hurt you? Why it could depend on your income The average tax cut for families that benefit would be roughly $1,700, while the bottom 20% of earners would save $200, according to the Budget Lab. A February analysis from the Tax Policy Center, a joint venture from the Brookings Institution and the Urban Institute, found ending taxes on tips would benefit about 2% of all households, or 60% of households with tipped workers, with an average tax cut of roughly $1,800 per year. This article originally appeared on USA TODAY: How 'no tax on tips' will work and who will benefit the most Sign in to access your portfolio
Newsweek
27 minutes ago
- Newsweek
Musk Threatens to Primary Republicans Over Trump Bill, Analysts React
Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. President Donald Trump and billionaire Elon Musk are embroiled in a new public spat over the much-debated financial package dubbed the "big, beautiful bill," which led to the Tesla CEO threatening to support primary challengers against Republicans who vote in favor of the sprawling federal budget proposal. Several analysts talked with Newsweek about repercussions the GOP could face if Musk follows through on his threat. Why It Matters Musk's intervention comes at a volatile moment: The attempted passage of Trump's fiscal initiative—the centerpiece of his legislative efforts—agonized party traditionalists and grassroots activists who have long campaigned on promises of fiscal restraint. Clashes over the bill also underscore significant fractures within the Republican Party as it aims to hold control of Congress amid mounting pressure from both establishment leaders and populist outsiders. Musk's threat to back the unseating of officeholders deviating from fiscal conservatism raises questions about grassroots accountability, donor influence and the enduring sway of Trump within GOP ranks. On Tuesday after a marathon "vote-a-rama," the Senate narrowly passed the bill, with a tiebreaking vote from Vice President JD Vance, sending it back to the House for final deliberations. Photo-illustration by Newsweek/Getty/Canva What To Know Political science professor at Columbia University, Robert Y. Shapiro, told Newsweek via email Tuesday night that Trump's political clout "is still strong" despite the fervent attacks from Musk. "His has been strengthened by the big win he can claim in the attack on Iran's nuclear sites. This did not improve his approval rating but that rating has held up thanks to the strong support from his MAGA base and other Republicans. Trump's party has minimal control of the Senate and the House, and Vance having to cast the deciding vote was not a sign of weakness but showed Trump's strength with Thune in holding majority support together in the Senate," Shapiro said. The political science professor added, "Do not be surprised to see the same in the House," while saying the Musk's political power is "limited." "His behavior is all theatrics," Shapiro said about Musk. "As is Trump's but Trump also still has the cards here. The biggest threat to Trump is if he can't get the bill passed in the House now after plowing it through the Senate, and if his tariffs and other erratic economic rhetoric and actions destabilize the economy. These could have repercussions as we move toward 2026 and the midterm elections -- but these are still far off." Musk has not shied away from blasting the piece of legislation backed by the president. In a Monday post to X, formerly Twitter, Musk said, "Every member of Congress who campaigned on reducing government spending and then immediately voted for the biggest debt increase in history should hang their head in shame! And they will lose their primary next year if it is the last thing I do on this Earth." D. Stephen Voss, political science professor at the University of Kentucky, told Newsweek via email Tuesday night, "Musk speaks for a small but influential faction within the Republican electorate, to a degree the same faction responsible for the rise of Liberty Republicans like Sen. Rand Paul and Rep. Thomas Massie. An endorsement from Musk could help such candidates in GOP primaries, especially if the support comes with sufficient financial backing to mount a serious campaign. Hard to say whether that would be a problem for Trump or the Republicans, though." Voss added that "robust" primaries don't necessarily "hurt" Republicans or Democrats but could "drain resources and sometimes cause bad blood." He did, however, highlight that they do get voters "engaged" by registering to vote, and in the practice of participating. Musk-backed candidates who win would have to "operate effectively within Congress," Voss says, while adding that it usually means compromise. "In terms of Trump losing clout: Trump is riding high within the Republican Party right now, so anyone who challenges him - from inside or outside the government - is running into the wind," Voss said. "Should Trump's job approval persist at rock-bottom levels, though, then breaking from him early could pay off, especially if Republicans suffer in the 2026 midterm elections. Eventually we'll see various Republicans fighting to define the future of the Republican Party, and who rises in that contest will be shaped by Trump's record over the next couple of years." Tesla CEO Elon Musk looks on as President Donald Trump speaks to reporters in the Oval Office of the White House on May 30 in Washington, D.C. (Photo by) Tesla CEO Elon Musk looks on as President Donald Trump speaks to reporters in the Oval Office of the White House on May 30 in Washington, D.C. (Photo by) Grant Davis Reeher, professor of political science at Syracuse University, told Newsweek on Wednesday, "My sense—just a sense, no data to bolster it—is that with his absence from the administration, Musk is beginning to fade in political influence." Reeher added: "He and Trump have patched up some of the worst aspects of their earlier falling out. The notion of a 'feud' is back in the news, but I don't see this dragging on as a running drama. Musk in particular doesn't have much to gain from that, but he does have much to lose. He wants to see government much smaller than it is, and if he wants to pursue that goal through political involvement, fighting with Democrats makes much more sense than fighting with Republicans." After Musk left his post heading the Department of Government Efficiency (DOGE) in May, he denounced the piece of legislation and also hurled public accusations at the president, including, "Time to drop the really big bomb: @realDonaldTrump is in the Epstein files. That is the real reason they have not been made public. Have a nice day, DJT!" Trump on Tuesday also floated the idea of Musk heading back to his native South Africa if the president halted government subsidies for his companies, adding later that his administration may even "have to take a look" at deporting the billionaire. Musk reacted to Trump's comment on Wednesday, calling it "so disappointing." What People Are Saying Musk posted to X on Tuesday: "What's the point of a debt ceiling if we keep raising it?" Trump, on Truth Social early Tuesday morning: "Elon Musk knew, long before he so strongly Endorsed me for President, that I was strongly against the EV Mandate. It is ridiculous, and was always a major part of my campaign. Electric cars are fine, but not everyone should be forced to own one. Elon may get more subsidy than any human being in history, by far, and without subsidies, Elon would probably have to close up shop and head back home to South Africa. No more Rocket launches, Satellites, or Electric Car Production, and our Country would save a FORTUNE. Perhaps we should have DOGE take a good, hard, look at this? BIG MONEY TO BE SAVED!!!" What Happens Next The aftermath of Musk's threat will likely unfold over time, as candidate filings approach for next year's midterms. Primary challengers backed by well-resourced figures remain a wild card for Republican leadership and could prompt incumbents to recalibrate fiscal messaging.
