WASHINGTON — President Trump asked congressional Republican leaders Thursday to end tax perks for sports team owners and hedge fund managers to pay for his campaign-trail pledges to eliminate taxes on tips, overtime, and Social Security benefits as well as to lift the $10,000 state and local tax deduction cap.
“This will be the largest tax cut in history for middle-class, working Americans,” White House press secretary Karoline Leavitt told reporters on the White House driveway as Trump, 78, met privately with the GOP leaders in the West Wing.
Leavitt, 27, read from a prepared list of Trump’s requests for the Republican-led House and Senate to approve, calling them the administration’s “tax priorities.”
“No tax on tips, which is obviously a very public campaign promise that the president made. No tax on seniors’ Social Security, no tax on overtime pay, renewing President Trump’s 2017 middle-class tax cuts.”
Continuing to read from the rundown, Leavitt added: “Adjusting the SALT cap; Eliminat[ing] all the special tax breaks for billionaire sports team owners; Clos[ing] the carried interest tax deduction loophole [and] Tax cuts for ‘Made in America’ products.”
It’s unclear whether all of the items will be included in pending legislation as House and Senate leaders differ on the best strategy.
House Speaker Mike Johnson (R-La.) favors loading Trump’s requests into a massive budget reconciliation package that can pass with a bare majority in both chambers.
Senate Majority Leader John Thune (R-SD), on the other hand, prefers a separate tax package that would need 60 votes in the upper chamber, meaning seven Democrats would have to vote in favor of allowing the bill to the floor.
Trump won the Nov. 5 election with his tax appeals to working-class voters and retirees and he has credited his plan to end taxes on tips with securing victory in Nevada — the first Republican to do so in 20 years.
The federal government stands to lose significant income with the tax cuts, though Trump generally argues that reduced taxes would boost economic activity, indirectly boosting tax revenue.
A legislated end to taxes on tips would cost about $118 billion over a decade — or about $11.8 billion per year — according to the Tax Foundation.
If overtime was exempt from payroll taxes, the Treasury would lose $1.3 trillion over a decade — or $130 billion per year — according to the Budget Lab at Yale.
The abolition of tax on Social Security benefits would cost up to $1.8 trillion over 10 years — or about $180 billion annually — according to the Committee for a Responsible Federal Budget.
The cost of changing the SALT deduction cap would depend on whether the cap is fully eliminated or merely increased, with total repeal estimated to cost $1.2 trillion over ten years — or $120 billion a year.
Trump’s call to close loopholes benefitting sports-team owners and hedge fund managers would make up for some of the reductions in revenue, but not all of them.
The carried-interest reform, which would treat investment mavens’ compensation as income rather than private equity gains subject to lower tax rates, would bring in between $1.4 billion and $18 billion per year, according to Americans for Financial Reform.
It’s unclear precisely how much the sports owner changes would net the government, but it’s likely that figure would be in the billions as well.
Owners currently are able to deduct from their tax liability the full purchase price of a franchise over 15 years. Those deals can be massive — with the Washington Commanders football team selling for a record $6.05 billion in 2023.
Sports team owners benefit from other federal perks, including tax-exempt municipal bonds for professional sports stadiums, which a 2020 Brookings Institution report said costs the government $4.3 billion in lost revenue.
Trump also has proposed using higher tariffs on imports as a way to finance tax cuts.
The looming tax reform struggle comes as Trump’s administration tries to cut federal discretionary spending as part of the Department of Government Efficiency initiative led by Elon Musk — while urging federal workers to take eight-month buyouts and pausing foreign aid.
