The Deduction One, Big, Beautiful Bill: The Good, the Bad, and the Ugly
Jun 2, 2025
Garett Watson, Director of Policy Analysis at the Tax Foundation, dives into the intricacies of the House GOP’s new tax package. He discusses the blend of permanent and temporary provisions, highlighting the impact on long-term investments. The conversation also explores the controversial state and local tax (SALT) deduction cap, analyzing its effects on high-income states. Watson stresses the need for tax stability and advocates for simplifying complex provisions to support a broader spectrum of taxpayers while fostering economic growth.
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Mixed Permanent and Temporary Provisions
- The bill permanently extends many individual provisions from the 2017 tax law while adding new temporary measures.
- This mix creates uncertainty due to sunsetting some important tax provisions, complicating long-term financial decisions.
Permanency Reduces Tax Complexity
- Making key tax provisions permanent reduces complexity by preventing taxpayers from adjusting each year.
- Temporary extensions add complexity and confusion due to frequent policy changes and new reporting requirements.
SALT Cap Increase: Costly and Controversial
- Increasing the SALT deduction cap benefits upper-middle earners but costs about $300 billion over 10 years.
- It introduces geographic and income disparities, complicating consensus among policymakers, especially in the Senate.