June 20, 2025 - Epoch Times
06:35
| 
| Time | Text |
|---|---|
| This is essentially what we call a reconciliation bill, and it's basically trying to finance the government for a decent period of time, and it looks at a 10-year budget window, simply because those are the rules. | |
| We use a 10-year budget window. | |
| And because it's reconciliation, it's not regular order, it can pass through both houses with a simple majority, so you don't have to worry about that 60-vote filibuster in the Senate, but it comes with a lot of caveats. | |
| For example, we can't be making changes to discretionary spending. | |
| We can only be looking at mandatory spending. | |
| If you do change spending, if you do change taxes, it has to be neutral over that 10-year budget window that we mentioned. | |
| So it's pretty constrained. | |
| And this is where, when guys like Elon Musk get very angry the bill doesn't cut enough, he's got a point. | |
| But you also need to understand there's a lot of spending that's off-limits in this bill. | |
| You can't cut it no matter how much you want to. | |
| That has to be done either through regular order or the rescissions packages, which we can get to. | |
| So again, reconciliation is difficult because you're very limited in what you can do and in the things you can touch, and there's a lot of stuff that's off-limits. | |
| Again, the upside is simple majority in both houses is all you need. | |
| And unfortunately, because of the gridlock we've had for... | |
| Not just years, maybe a couple decades now. | |
| There really have been very few things that have gotten passed through regular order in Congress. | |
| What we have typically seen are these continuing resolution bills or the reconciliation process. | |
| Because, again, it's just too hard to get that 60-vote majority in the Senate. | |
| So now give me a picture of where things stand. | |
| So going back to this SALT, the state and local tax deduction, the House put a big increase in it. | |
| Before, there technically was no cap, although the alternative minimum tax essentially captured everybody after a certain income. | |
| But what the Tax Cuts and Jobs Act did is it capped that deduction at $10,000. | |
| In other words, you can only deduct $10,000 of your state and local tax payments from your federal tax liability. | |
| What the House would do is greatly increase that. | |
| In the Senate, however, There's no real constituency for that. | |
| In other words, if you're a Republican in upstate New York, your constituents face a relatively high tax rate because the taxes are just terrible in New York State, even if they're not as bad as in New York City, let's say, a very blue area. | |
| So even the red districts, though, are stuck paying this very high tax rate. | |
| Well, their wealthy constituents would like to see that. | |
| State and local tax deduction increased because it means they can write off more of their New York state taxes on their federal tax return. | |
| But when you start talking about the Senate, you're talking about people who are elected statewide. | |
| There are no Republican senators from a place like New York or Illinois or California or New Jersey. | |
| In other words, these different blue states that have red districts here and there. | |
| That's not a consideration in the Senate. | |
| It has been in the House, because the margin is so tight in the House, the majority is very small for Republicans in the House, so they need those different representatives on board. | |
| But in the Senate, no one really cares. | |
| At least on the Republican side, no one cares about something like the SALT deduction. | |
| There are a few other things, like the expensing provision. | |
| This is where we talked about trying to bring manufacturing back, right? | |
| If you build a factory here in the U.S. in 2025, you should be able to deduct the entire expense of that this year, as opposed to you only get to deduct a very small portion, and then over the next 29 years, you have to deduct the rest of it on future tax returns. | |
| Well, what if you're not here in 29 years? | |
| What if inflation brings down the value of this asset so much that the tax deduction isn't really worth anything at that point? | |
| There's a lot of problems with that kind of expensing. | |
| And it's part of the reason why you should be able to expense the asset today, not the least of which is because you had to pay for it today, right? | |
| What the House bill would do is make that expensing provision, that full expensing rather, it only gives you that provision for a couple of years, and then it goes away again. | |
| That's no way to run a tax code. | |
| That's no way to run an economy. | |
| This is arguably the most pro-growth provision in the entire bill, and it's temporary. | |
| That's not good. | |
| So the Senate could make that permanent. | |
| Again, they could cap that SALT deduction, reduce the cap, I should say. | |
| I'd love to see them get rid of it entirely. | |
| I understand that's not realistic right now. | |
| They could make more cuts as well. | |
| And I understand they're limited in the kinds of things in the budget that they can cut, but there's no reason why the I'm sorry, that's inexcusable. | |
| Trump won't even be president at that point, to put that in context. | |
| Those things can and should end immediately. | |
| There's no reason to prolong that. | |
| And it would save taxpayers hundreds of billions of dollars. | |
| So there are a lot of different ways in which they could cut more spending. | |
| They could provide even more tax relief, which would be great. | |
| They could tweak the tariff scheme, essentially kind of bring that in-house, bring it back to Congress, really where it belongs, and say, okay, this 10% We're going to get rid of that and make it a 10% border adjustment tax that we were talking about earlier. | |
| One of the biggest benefits from that is, because remember, this is all happening in the reconciliation process, if you make that a tax in statute as opposed to something that's at the whim of the executive, once it's in statute, you can use it as a revenue generator, which means in that 10-year budget window, we get to count Ten years worth of this border adjustment tax, the import duties. | |
| And what do we do with all that money? | |
| We can use it to reduce income taxes here at home, which is great. | |
| Think about it. | |
| Whose navy is it that patrols the world's sea lanes, that facilitates international trade? | |
| It's us. | |
| Why are American taxpayers the only one footing that bill? | |
| I think it actually makes economic, political, and social sense. | |
| To put some of that tax burden on the rest of the world, since they're the ones benefiting from it. |
Export Selection