Since his election, President-elect Donald Trump vowed to create a more robust and competitive nation. As we look towards federal tax changes in 2025, it is crucial to ensure that our tax code aligns with this vision. Two key provisions from the 2017 Tax Cuts and Jobs Act must be made permanent to foster America’s internal dynamism and global competitiveness.
Driving Interstate Competition:
- The federal tax code should eliminate tax subsidies for high-tax states by permanently capping the federal deduction for state and local taxes (SALT).
- Furthermore, providing 100% bonus depreciation for all capital expenditures will incentivize production within the United States.
Strengthening American Federalism:
- Interstate competition among states promotes efficiency and policy reforms.
- Making the SALT cap permanent will discourage fiscal mismanagement in large states like California and New York, ultimately leading to better governance.
Global Competitiveness:
- To compete with countries like China, the tax code should reduce the cost of capital for U.S.-based production.
- Full expensing, or 100% bonus depreciation, allows for immediate write-offs of capital expenditures, driving investment and reshoring of critical supply chains.
As we move forward, it is essential for federal lawmakers to prioritize these provisions and solidify them in the tax code. By doing so, we can propel America towards a future of prosperity and success.
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