Latest news with #federalrevenue
Yahoo
4 days ago
- Business
- Yahoo
Tariff rebate checks may sound awesome but they could be ‘quite dangerous'
President Donald Trump's sweeping tariff regime is generating so much revenue for the federal government that Washington could eventually return some of that windfall to taxpayers. Even though Trump's historically high tariffs were designed to revive American manufacturing and to help chip away at the national debt, the president sounds open to using tariffs for another purpose: rebate checks. 'We're taking in so much money that we may very well make a dividend to the people of America,' Trump said Tuesday. Although discussions on rebate checks are preliminary and nothing is imminent, it's easy to see how this idea could be quite popular among voters. After all, who doesn't like getting a check from Uncle Sam? These rebate checks could be a lifeline for people struggling to make ends meet, while simultaneously easing lingering frustration among voters about the high cost of living. Sen. Josh Hawley proposed a bill last week, the American Worker Rebate Act, that would use tariff revenue to send rebate checks of at least $600 per adult and dependent child. A family of four could end up with at least $2,400 in money from the federal government. But tariff rebate checks, if they become reality, could backfire by intensifying the price hikes caused by tariffs, economists tell CNN. 'Doing stimulus checks might fuel inflation – at a point where tariffs are already inflationary. This just risks making the problem worse,' said Stephanie Roth, chief economist at Wolfe Research. 'It could become quite dangerous.' Tariff revenue spikes Of course, it's hard to know exactly how this would play out. Much would depend on the details of the tariff rebate program and the state of the broader economy. History shows that Americans tend to quickly spend much, or all, of their stimulus checks. Such spending would boost demand – without solving any of the supply problems gripping an economy grappling with an aging population, an immigration crackdown and the trade war. 'You could end up with shortages of certain goods. It risks becoming very inflationary,' Roth said. But the White House has been celebrating the fact that the federal government is raking in massive amounts of tariff revenue, and rebate checks could help turn around voters' sentiment about tariffs, which is deep under water. In July alone, the United States collected almost $30 billion in tariff revenue – 242% more than the same month last year, according to the Treasury Department. Since April, tariff revenue has totaled about $200 billion – triple the same period of 2024. Normally, direct payments to Americans are reserved for break-the-glass emergencies. Think: Stimulus checks sent out during the Covid-19 pandemic, the Great Recession and following the Sept. 11 terror attacks. Trump slammed President Joe Biden and Vice President Kamala Harris in 2024 for enacting a stimulus package that 'caused the worst inflation in American history.' (Inflation spiked to a four-decade high in 2022 for a variety of reasons, though some economists do say excessive stimulus contributed.) By contrast, there is no economic emergency today that would justify stimulus checks. Although cracks are emerging in the job market and economists are using the dreaded r-word again ('recession'), the unemployment rate remains low at 4.2%. Foreclosures are not skyrocketing. And the US stock market is at or near all-time highs. 'From a political standpoint, it may be clever. But stimulus checks in a full employment economy is like dessert before eating your spinach,' said David Kelly, chief global strategist at JPMorgan Asset Management. 'We're running out of workers. If you give consumers more money to spend, it will just give you higher prices.' Some economists and Trump officials argue that tariffs will only be a one-time boost to the level of US prices. However, layering rebate check on top of tariffs risks causing a more widespread and lasting inflation increase, according to David Kotok, co-founder of Cumberland Advisors. 'That is a very serious risk. And if you do it as the workforce is shrinking, which is what we have now, then you risk triggering a wage-price spiral,' Kotok said. That's why tariff rebates would further complicate the already difficult task facing the Federal Reserve. Fed officials are already struggling to decide whether to cut rates in a bid to shore up the job market or stay on the sidelines in case inflation continues to heat up. Hawley: Give money back to blue-collar workers Asked about concerns tariff rebate checks will fan inflation, a White House official told CNN that tariffs are 'bringing in historic revenue for the federal government.' The White House official echoed Trump's remarks that rebates are still being considered, but stressed that no formal policy has been unveiled and discussion of how rebates would impact inflation is speculative. Still, the Hawley bill, introduced last week, would amount to a significant cash injection for families. 'These tariffs are raising incredible amounts of money,' Hawley told Steve Bannon's War Room last week. 'My view is: we ought to give a portion of that back to our working class, blue-collar voters who powered the Trump revolution, who got this president into office multiple times and who are the backbone of this nation.' The Hawley bill allows for even bigger rebate checks to get delivered if tariff revenue surpasses forecasts. The legislation is aimed at boosting lower and middle-income Americans, with a phase out for higher-income earners. The size of the rebate would shrink by 5% of adjusted gross income above $150,000 for joint filers. That reduction would start at $112,500 for heads of household and $75,000 for individuals. 'Pandering at its lowest form' Many Americans could use the cash injection. Just over half (53%) of Americans say the cost of groceries is a major source of stress, according to a poll released this week by The Associated Press-NORC Center for Public Affairs Research. Another 33% say the cost of groceries is a minor source of stress. 'It's disconcerting to watch those prices go up. I notice it every time I go to the grocery store,' said David Mitchel, a marketing manager who lives in Dallas. Mitchel said he's unsure if he'd support tariff rebate checks, adding that he's more focused on 'sustainable policy' than short-term fixes. Douglas Holtz-Eakin, president of center-right think tank American Action Forum, told CNN that tariff rebate checks amount to 'pandering at its lowest form.' 'What's the point? To spend more than the tariffs are bringing in and to buy votes?' asked Holtz-Eakin, who served as an economic adviser to President George W. Bush. 'If you have a high-price problem, you need more supply. Subsidizing demand only makes the problem worse.' What about the national debt? Consumer goods are the leading source of tariff revenue, accounting for $9.8 billion, or 13.5%, of the tariff revenue collected in May, according to research from Peterson Institute for International Economics. Although Trump likes to brag about the billions of dollars tariffs are 'bringing in,' this revenue is not coming from overseas. It's being paid by US importers to the federal government, padding the general fund the Treasury Department uses to pay Washington's bills. Some companies are opting to pass along at least some of the cost of tariffs to consumers in the form of higher prices. Procter & Gamble, Nike, Walmart, Adidas, Ford and a series of major companies have said they plan to or have already hiked prices because of tariffs. 'Collecting a tax and then handing it back to taxpayers makes no policy sense,' said Kimberly Clausing, nonresident senior fellow at the Peterson Institute. 'It keeps all the distortions and efficiency losses associated with tariffs, but without any of the fiscal benefit.' Trump said Tuesday that his goal remains in place to use tariff revenue to ease massive budget deficits. 'The purpose of what I'm doing is primarily to pay down debt, which will happen in very large quantity,' Trump said. Still, deficit hawks fear that redirecting a chunk of the tariff revenue will undermine that effort at a time when Trump's sweeping tax cuts and spending package is projected to add trillions to the national debt. 'While the money is only a fraction of the borrowing from the recent tax cuts, it will at least help to offset those costs,' said Maya MacGuineas, president of the Committee for a Responsible Federal Budget, a deficit watchdog group. 'The last thing we should do is give the money away.' Erreur lors de la récupération des données Connectez-vous pour accéder à votre portefeuille Erreur lors de la récupération des données Erreur lors de la récupération des données Erreur lors de la récupération des données Erreur lors de la récupération des données
CNN
4 days ago
- Business
- CNN
Tariff rebate checks may sound awesome but they could be ‘quite dangerous'
President Donald Trump's sweeping tariff regime is generating so much revenue for the federal government that Washington could eventually return some of that windfall to taxpayers. Even though Trump's historically high tariffs were designed to revive American manufacturing and to help chip away at the national debt, the president sounds open to using tariffs for another purpose: rebate checks. 'We're taking in so much money that we may very well make a dividend to the people of America,' Trump said Tuesday. Although discussions on rebate checks are preliminary and nothing is imminent, it's easy to see how this idea could be quite popular among voters. After all, who doesn't like getting a check from Uncle Sam? These rebate checks could be a lifeline for people struggling to make ends meet, while simultaneously easing lingering frustration among voters about the high cost of living. Sen. Josh Hawley proposed a bill last week, the American Worker Rebate Act, that would use tariff revenue to send rebate checks of at least $600 per adult and dependent child. A family of four could end up with at least $2,400 in money from the federal government. But tariff rebate checks, if they become reality, could backfire by intensifying the price hikes caused by tariffs, economists tell CNN. 'Doing stimulus checks might fuel inflation – at a point where tariffs are already inflationary. This just risks making the problem worse,' said Stephanie Roth, chief economist at Wolfe Research. 'It could become quite dangerous.' Of course, it's hard to know exactly how this would play out. Much would depend on the details of the tariff rebate program and the state of the broader economy. History shows that Americans tend to quickly spend much, or all, of their stimulus checks. Such spending would boost demand – without solving any of the supply problems gripping an economy grappling with an aging population, an immigration crackdown and the trade war. 'You could end up with shortages of certain goods. It risks becoming very inflationary,' Roth said. But the White House has been celebrating the fact that the federal government is raking in massive amounts of tariff revenue, and rebate checks could help turn around voters' sentiment about tariffs, which is deep under water. In July alone, the United States collected almost $30 billion in tariff revenue – 242% more than the same month last year, according to the Treasury Department. Since April, tariff revenue has totaled about $200 billion – triple the same period of 2024. Normally, direct payments to Americans are reserved for break-the-glass emergencies. Think: Stimulus checks sent out during the Covid-19 pandemic, the Great Recession and following the Sept. 11 terror attacks. Trump slammed President Joe Biden and Vice President Kamala Harris in 2024 for enacting a stimulus package that 'caused the worst inflation in American history.' (Inflation spiked to a four-decade high in 2022 for a variety of reasons, though some economists do say excessive stimulus contributed.) By contrast, there is no economic emergency today that would justify stimulus checks. Although cracks are emerging in the job market and economists are using the dreaded r-word again ('recession'), the unemployment rate remains low at 4.2%. Foreclosures are not skyrocketing. And the US stock market is at or near all-time highs. 'From a political standpoint, it may be clever. But stimulus checks in a full employment economy is like dessert before eating your spinach,' said David Kelly, chief global strategist at JPMorgan Asset Management. 'We're running out of workers. If you give consumers more money to spend, it will just give you higher prices.' Some economists and Trump officials argue that tariffs will only be a one-time boost to the level of US prices. However, layering rebate check on top of tariffs risks causing a more widespread and lasting inflation increase, according to David Kotok, co-founder of Cumberland Advisors. 'That is a very serious risk. And if you do it as the workforce is shrinking, which is what we have now, then you risk triggering a wage-price spiral,' Kotok said. That's why tariff rebates would further complicate the already difficult task facing the Federal Reserve. Fed officials are already struggling to decide whether to cut rates in a bid to shore up the job market or stay on the sidelines in case inflation continues to heat up. Asked about concerns tariff rebate checks will fan inflation, a White House official told CNN that tariffs are 'bringing in historic revenue for the federal government.' The White House official echoed Trump's remarks that rebates are still being considered, but stressed that no formal policy has been unveiled and discussion of how rebates would impact inflation is speculative. Still, the Hawley bill, introduced last week, would amount to a significant cash injection for families. 'These tariffs are raising incredible amounts of money,' Hawley told Steve Bannon's War Room last week. 'My view is: we ought to give a portion of that back to our working class, blue-collar voters who powered the Trump revolution, who got this president into office multiple times and who are the backbone of this nation.' The Hawley bill allows for even bigger rebate checks to get delivered if tariff revenue surpasses forecasts. The legislation is aimed at boosting lower and middle-income Americans, with a phase out for higher-income earners. The size of the rebate would shrink by 5% of adjusted gross income above $150,000 for joint filers. That reduction would start at $112,500 for heads of household and $75,000 for individuals. Many Americans could use the cash injection. Just over half (53%) of Americans say the cost of groceries is a major source of stress, according to a poll released this week by The Associated Press-NORC Center for Public Affairs Research. Another 33% say the cost of groceries is a minor source of stress. 'It's disconcerting to watch those prices go up. I notice it every time I go to the grocery store,' said David Mitchel, a marketing manager who lives in Dallas. Mitchel said he's unsure if he'd support tariff rebate checks, adding that he's more focused on 'sustainable policy' than short-term fixes. Douglas Holtz-Eakin, president of center-right think tank American Action Forum, told CNN that tariff rebate checks amount to 'pandering at its lowest form.' 'What's the point? To spend more than the tariffs are bringing in and to buy votes?' asked Holtz-Eakin, who served as an economic adviser to President George W. Bush. 'If you have a high-price problem, you need more supply. Subsidizing demand only makes the problem worse.' Consumer goods are the leading source of tariff revenue, accounting for $9.8 billion, or 13.5%, of the tariff revenue collected in May, according to research from Peterson Institute for International Economics. Although Trump likes to brag about the billions of dollars tariffs are 'bringing in,' this revenue is not coming from overseas. It's being paid by US importers to the federal government, padding the general fund the Treasury Department uses to pay Washington's bills. Some companies are opting to pass along at least some of the cost of tariffs to consumers in the form of higher prices. Procter & Gamble, Nike, Walmart, Adidas, Ford and a series of major companies have said they plan to or have already hiked prices because of tariffs. 'Collecting a tax and then handing it back to taxpayers makes no policy sense,' said Kimberly Clausing, nonresident senior fellow at the Peterson Institute. 'It keeps all the distortions and efficiency losses associated with tariffs, but without any of the fiscal benefit.' Trump said Tuesday that his goal remains in place to use tariff revenue to ease massive budget deficits. 'The purpose of what I'm doing is primarily to pay down debt, which will happen in very large quantity,' Trump said. Still, deficit hawks fear that redirecting a chunk of the tariff revenue will undermine that effort at a time when Trump's sweeping tax cuts and spending package is projected to add trillions to the national debt. 'While the money is only a fraction of the borrowing from the recent tax cuts, it will at least help to offset those costs,' said Maya MacGuineas, president of the Committee for a Responsible Federal Budget, a deficit watchdog group. 'The last thing we should do is give the money away.'
Bloomberg
6 days ago
- Business
- Bloomberg
What's a ‘Secondary Tariff' Like the One Trump Imposed on India?
In his second term as US president, Donald Trump has used tariffs as a blanket solution to pursue a wide range of goals: increasing domestic manufacturing and foreign market access, boosting federal revenue, and even punishing the government of Brazil for prosecuting his political ally, former President Jair Bolsonaro. Now he's deployed a tool he calls a 'secondary tariff' in an effort to get countries to distance themselves from US adversaries. On Aug. 6, Trump announced that such a tariff on imports from India would take effect in 21 days. On top of an existing 25% levy on goods from India, he added an additional 25% tariff to penalize India for buying oil from Russia.
Yahoo
28-07-2025
- Business
- Yahoo
Who Benefits From Tax Changes in Trump's ‘Big Beautiful Bill'?
President Donald Trump signed the One Big Beautiful Bill Act into law, marking the largest tax package in recent American history. The legislation promises sweeping changes across the tax landscape, extending previous cuts while introducing new provisions that affect millions of Americans. However, analyzing the distribution of these benefits reveals a complex picture of who truly gains from these changes — we'll explore this below. For You: Read Next: The Big Winners: High-Income Earners Lead the Pack The One Big Beautiful Bill is projected to reduce federal revenues by about $5 trillion between 2025 and 2034, according to the Tax Foundation. Analysis by ITEP shows that 69% of net tax cuts in 2026 will go to the top 20% of earners and the wealthiest 1% receive an average annual tax cut of $61,000, vastly exceeding benefits for other groups. 'The tax benefits primarily go to the 'rich,' and much of the cuts will negatively impact the 'poor,'' said Jay Zigmont, Ph.D., certified financial planner (CFP) and founder of Childfree Trust. The legislation is also expected to increase the national debt by $3.3 trillion to $4 trillion over ten years. Higher-income households benefit from the temporary SALT deduction increase, with significant relief for those in high-tax states. See More: Estate Tax Changes Favor Ultra-Wealthy Families The legislation permanently raises the estate and gift tax exemption to $15 million per individual or $30 million for married couples, per Tax Foundation analysis. This represents a dramatic increase from previous levels and removes uncertainty around potential reductions. 'The increase in the estate tax exemption to $15 million is a great example of a benefit solely for those with very high net worths,' explained Zigmont. This change primarily affects families with substantial wealth, as most American households fall well below these exemption thresholds. The permanence of this provision ensures wealthy families can engage in long-term estate planning without concerns about future reductions. Middle-Class Benefits Come With Important Limitations The legislation includes several provisions targeting middle-income Americans, though their impact varies significantly by household circumstances. A new $6,000 senior bonus deduction benefits taxpayers aged 65 and older, but phases out for higher earners. According to AARP analysis, the deduction reduces to zero for single filers earning above $175,000 annually. The bill creates tax exemptions for tips and overtime pay, addressing campaign promises from the 2024 election. CNBC reported that workers can deduct up to $25,000 in tip income and $12,500 in overtime pay annually, with both benefits phasing out for higher earners. However, Zigmont shared important limitations: 'The deductions for tips and overtime are limited' and 'both are temporary cuts' lasting only through 2028. New Programs Target Future Generations Trump Accounts represent a novel approach to childhood savings, providing $1,000 government contributions for babies born between 2025 and 2028. According to White House statements, these accounts will be a benefit to children by way of compounded savings. Parents can contribute up to $5,000 annually, with funds growing tax-deferred until age 18. Zigmont shared potential market effects of these. 'The plan is for the government to provide $1,000 for each child when they are born into an account that needs to be invested in a broad market index,' he said. With approximately 3.6 million births annually, this creates substantial ongoing market investment. Significant Cuts Impact Vulnerable Populations The legislation introduces about $1 trillion in Medicaid cuts over ten years, threatening coverage for up to 11.8 million Americans, per the Congressional Budget Office. 'People who rely on Medicaid and SNAP programs are most at risk,' Zigmont said — with $230 billion in SNAP reductions affecting 22.3 million families, Urban Institute reports. 'Women's health in rural areas is likely to be hurt,' Zigmont said, as Medicaid cuts and Planned Parenthood defunding further limit access to essential healthcare in underserved communities, shifting more costs onto states and disproportionately hurting those already struggling. Long-Term Fiscal Consequences Raise Concerns The OBBBA is projected to add between $3.3 trillion and $4 trillion to the national debt over the next decade, according to Zigmont. The Tax Foundation estimates this will push the U.S. debt-to-GDP ratio up by 9.6 percentage points to 126.7% by 2034. This rising debt could force future tax hikes or spending cuts, limiting government flexibility and straining the economy. While the bill delivers substantial, lasting benefits to high-income households, middle-class gains are smaller and temporary. 'At some point that debt is going to be due and we have no solution at this point,' Zigmont added. Editor's note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on More From GOBankingRates Mark Cuban Says Trump's Executive Order To Lower Medication Costs Has a 'Real Shot' -- Here's Why This article originally appeared on Who Benefits From Tax Changes in Trump's 'Big Beautiful Bill'? Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Malay Mail
08-07-2025
- Politics
- Malay Mail
Judgment on Sabah's 40pc federal revenue claim delayed, High Court sets Aug 7 for next steps
KOTA KINABALU, July 8 — The High Court has set August 7 for an online case management (e-review) to determine the next steps in the Sabah Law Society's (SLS) judicial review over the state's entitlement to 40 per cent of federal revenue collected from Sabah. High Court judge Justice Datuk Celestina Stuel Galid fixed the date on Monday following the conclusion of the substantive hearing, noting that additional time was needed due to the complexity and volume of documents in the case, according to The Star. While courts typically deliver decisions within four weeks, Justice Stuel said this case required further consideration before judgment could be issued. The August 7 e-review will decide whether more clarification is required or if a judgment date can be scheduled. SLS filed the judicial review in June 2022, challenging the Federal Government's alleged failure to uphold Sabah's constitutional revenue rights. The High Court granted leave in November 2022, and subsequent appeals by the Federal Government to the Court of Appeal and Federal Court were dismissed unanimously. This allowed the case to proceed to a full hearing on its merits at the High Court. SLS is represented by Dr David Fung and a legal team comprising Jeyan Marimuttu, Janice Lim, and Grace Liew, while the Federal Government is represented by Senior Federal Counsel Ahmad Hanir Hambaly @ Arwi and others. The Sabah government is represented by state Attorney General Datuk Brenndon Soh, along with Devina Teo and Roland Alik. On Monday morning, several state assemblymen attended the proceedings, including former chief ministers Datuk Seri Mohd Shafie Apdal and Datuk Yong Teck Lee. Also present were assemblymen Datuk Darell Leiking (Moyog), Assaffal P. Alian (Tungku), Calvin Chong (Elopura), and Justin Wong (Sri Tanjong), as well as former Kota Kinabalu MP Datuk Jimmy Wong Sze Phin and Science, Technology and Innovation Ministry permanent secretary Datuk Mohd Hanafiah Mohd Kassim. Deputy Chief Minister Datuk Seri Jeffrey Kitingan joined the court in the afternoon session.
