Budget Lab Panel Examines the Coming Tax Debate

Next year, many provisions of President-elect Trump’s signature tax law from his first term, the Tax Cuts and Jobs Act (TCJA), will expire. Because of this, tax policy is expected to be a key focus for the new Congress.

On Nov. 20, The Budget Lab at Yale, a policy research center at the Law School, hosted a panel discussion on what the tax policy debate next year may look like. Moderated by Budget Lab Executive Director Martha Gimbel, the panel featured Rachel Snyderman, managing director of the economic policy program at the Bipartisan Policy Center; Kyle Pomerleau, senior fellow at the American Enterprise Institute; and Michael Linden, senior policy fellow at the Washington Center for Equitable Growth.

There was broad agreement that the TCJA would most likely be extended, at least in part. 

“We’re not in a scenario where we’re dealing with not extending the TCJA. It’s really about what parts are we extending and how much that is going to cost,” said Snyderman. 

“What lawmakers should be doing is looking at the Tax Cuts and Jobs Act and asking: What did it do right, and what are areas where [it] needs to be improved?” said Pomerleau. He identified the law’s successes as reducing disincentives to work and invest by lowering tax rates, simplifying individual taxes, and encouraging investment by allowing business to expense more assets.

The economic situation is also different from when the law was originally passed in 2017. The inflation of recent years, and the Federal Reserve’s response through increased interest rates, have driven up federal borrowing costs and made deficit financing a more difficult proposition. 

Linden identified tax cuts as being responsible for the current fiscal situation: “I don’t accept that we have a spending problem and a tax problem. We don’t. We just have a tax cut problem. We have been cutting taxes for 25 straight years and we’re in a giant fiscal hole because of it.”

Over the course of the presidential campaign, President-elect Trump proposed historically large tariffs, as well as specific tax exemptions for tips, overtime wages, Social Security benefits, car loan interest, and police officers, firefighters, veterans, and active duty military. The Budget Lab has analyzed the revenue effects of many of these policies and will continue to publish new analyses as the policy debate unfolds.

The panel drew a standing-room-only crowd, in addition to nearly 100 watching the livestream. 

“We were incredibly grateful to be able to host a spirited discussion about the future of tax policy in the United States and what policymakers need to be thinking about next year,” Gimbel said.

Launched in 2024, The Budget Lab at Yale is a nonpartisan policy research center dedicated to providing in-depth analysis of federal policy proposals for the American economy.