Key Takeaways
Today, congressional Republicans are pushing tax reform proposals that would cost the country over $5 trillion and would likely widen the racial wealth gap and slow economic growth.Economic hardship plagues millions of hardworking families who face challenges from high costs, inflation, and corporate greed. Reforming the tax code to ensure more fairness, sufficient revenues to support the public good, and relief for everyday people is paramount to creating a healthier economy. These tax policies fall far short of that. While there is a lot to be learned in 2025, here are three main priorities from congressional Republicans and how they impact economic and racial equity.
Priorities | Impact | By the Numbers |
Massive giveaways for corporations and big businesses | Enriches executives and gives corporations more economic and political power, which they wield to influence elections and lobby lawmakers for more tax breaks Slows economic growth due to sharp increase in the national debt | Cutting corporate taxes cost the country $1.3 trillion from 2018-2027. The 296 largest U.S. corporations paid $240 billion less in taxes from 2018 to 2021. Black and Hispanic households received only 1 percent of corporate tax breaks in 2022. |
Lower taxes for the ultrawealthy | Widens racial income and wealth inequality and slows income growth Means there is less tax revenue, which lawmakers propose to make up for by cutting funding for public goods and programs | In 2025, the top 1 percent of taxpayers will see their tax bills reduced by over $61,000. If Congress passes President Trump’s full tax agenda, middle-income tax payers could see their tax bills increase by $1,530, while the richest 1 percent will receive on average a $36,320 tax cut. |
Slashing funding for Direct File and IRS | Makes tax system and enforcement less fair and leads to disproportionate cost burden on Black and brown taxpayers while ultrawealthy households and corporations manipulate the system | If fully implemented across the country, Direct File could help low-income families receive more than $12 billion in tax credits that they are not currently accessing. Cutting funding for the IRS would add $65.8 billion to the deficit over 10 years. |
Background
Why is there a big focus on taxes this year?
The “Tax Cuts and Jobs Act” (TCJA) cost the country $2 trillion, widened inequality, and slowed economic growth.
During his first administration, President Trump and Republican members of Congress cut taxes for corporations and wealthy households in a major tax reform bill that did very little for households with low or moderate incomes. This bill, known as the “Tax Cuts and Jobs Act” (TCJA) cost the country $2 trillion, widened inequality, and slowed economic growth.
Some elements of the TCJA are set to expire at the end of 2025. President Trump and Republican lawmakers, who now have control of the Senate and the House of Representatives, want to extend the most inequitable elements of the 2017 tax bill by making permanent and even deepening tax cuts for wealthy households and corporations.
These tax cuts will be expensive: Extending the expiring elements of the TCJA alone would cost $466 billion in just the first year and $5 trillion over 10 years. This means there will be less money to invest in public goods and programs. Republican lawmakers are already threatening to pay for tax cuts for the wealthy by slashing funding for Medicaid, the Supplemental Nutritional Assistance Program (SNAP), and other safety net programs – changes that would affect over 70 million people and disproportionally harm Black and brown people.
Read more about the impact of the 2025 tax proposals and what Congress can do instead to advance equity
