Open Letter Discusses Tax Policy Tweaks in Passed House Bill
TL/DR –
The National Taxpayers Union (NTU) has written to the Senate, offering suggestions for refining H.R. 1, the One Big Beautiful Bill Act (OBBBA). NTU recommends strengthening pro-growth provisions, simplifying the tax code, and improving fiscal discipline to maximize economic growth. Specifically, NTU suggests further reducing the corporate income tax rate, making full immediate and permanent business expensing and research and development tax deductions, decreasing or eliminating the state and local tax deduction, maintaining the lowered top income tax rate, phasing out tax credits from the Inflation Reduction Act, eliminating the corporate book tax and stock buyback tax, making key improvements to international provisions, removing the increased excise tax rates on large foundations in the House-passed bill, indexing more of the tax code for inflation, and avoiding provisions that add complexity.
Improvements to Senate’s Tax Reform Bill
The National Taxpayers Union (NTU) is offering its perspective on the Senate’s consideration of H.R. 1, the One Big Beautiful Bill Act. While the NTU supports the House-passed bill, they have identified additional improvements that could make the legislation more taxpayer-friendly. Key recommendations include strengthening pro-growth provisions, code simplification, and enhancing fiscal discipline to maximize economic growth under the Trump administration.
The House has already made significant changes to the bill, including stricter Medicaid work requirements and accelerated phaseouts of Inflation Reduction Act green energy tax credits. The NTU encourages the Senate to make further amendments, including:
Reduction of Corporate Income Tax Rate
The NTU urges Congress to build on the Tax Cuts and Jobs Act (TCJA) of 2017 by further reducing the corporate income tax rate, thus stimulating economic growth, investment, and job creation. Simultaneously, the NTU suggests reducing or eliminating costly tax provisions that do not drive growth or provide widespread economic benefits. Read more here.
Full, Immediate, and Permanent Expensing
Favoring permanent full expensing, the NTU argues that the current sunset diminishes potential economic growth. They recommend that the Senate make the measure permanent, yielding real GDP growth within a 10-year budget window. The Tax Foundation supports this sentiment, stating that “full expensing fixes a bias in the corporate tax”.
Research and Development Tax Deduction
Changes in the TCJA requiring amortization of R&D expenses over five years raised the cost of innovation, hurting the economy and reducing America’s competitiveness. The NTU advises making the immediate deduction of domestic research expenses permanent, stating that the economic growth benefits outweigh the limited revenue impact. More details here.
State and Local Tax Deduction
The NTU criticizes the OBBBA’s quadrupling of the State and Local Tax (SALT) deduction, which predominantly benefits high tax states and the wealthy. They recommend reducing or eliminating this deduction entirely to provide more widespread tax relief.
Top Income Tax Rate, Inflation Reduction Act Tax Credits, Corporate Book Tax, and Stock Buyback Tax
The NTU is advocating against raising the top income tax rate, arguing it would harm small businesses. They also support the elimination of green energy tax credits from the Inflation Reduction Act and the repeal of the Corporate Book Tax and Stock Buyback Tax, all seen as burdens to economic growth and taxpayer savings.
International Provisions
The NTU suggests key improvements to taxpayers with international income, including modifying the Base Erosion Anti-Abuse Tax (BEAT) to minimize situations where it falls on payments to high-tax countries or where Controlled Foreign Corporation (CFC) payments are already being taxed through GILTI/Subpart F.
Tax on Private Foundations, Inflation Indexing, and Provisions That Add Complexity
The NTU calls for the removal of the increased excise tax rates on foundations with large endowments, the indexing for inflation in the Child Tax Credit, and the simplification of the tax code by using revenue from other measures to increase the standard deduction or permanently increase the child tax credit.
The NTU emphasizes its strong support for H.R. 1 but underscores the potential for pro-taxpayer improvements. They look forward to working with the Senate as this crucial legislation nears floor action.
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