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Trump tariffs would help pay for his tax cuts, JD Vance says

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Former President Donald Trump’s agenda of higher tariffs on U.S. imports would help offset his expanding tax-cut proposals if he’s reelected in November, according to his running mate, Ohio Senator JD Vance.

“If we actually balance this out by penalizing some of these companies for manufacturing overseas I do think that we can get this to balance out in the right way, where we’re not blowing a hole in the deficit, we’re giving workers more of their money,” Vance said Sunday on CBS’s Face the Nation.

Trump has rolled out a series of tax plans, seeking to appeal to various voter groups. He has proposed ending all taxes on tipped income and overtime work and on Social Security retirement benefits, raising questions among economists and political opponents about the impact on the US budget deficit.

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Former President Donald Trump shakes hands with Senator JD Vance, a Republican from Ohio and Republican vice-presidential nominee, during a campaign event in Atlanta.

Dustin Chambers/Bloomberg

Trump floated the idea of tariff hikes to offset some income tax cuts to House Republicans in June.

Asked on Sunday whether fiscally conservative Republicans in Congress would go along, Vance said that “obviously Republicans believe American workers should keep more of their own money.”

Trump has pledged to enact a 10% across-the-board tariff on imports, potentially targeting trading partners such as the European Union, and to increase duties on Chinese-made goods to 60% or more, saying that would generate trillions for the US. 

Most economists argue that Americans would ultimately pay higher costs and face reignited inflation.

Vice President Kamala Harris, the Democratic nominee, portrayed Trump’s tariff plans as a 20% “Trump sales tax” on everyday goods during their presidential debate on Sept. 10, a description the former president rejected.

Economists say both candidates’ tax and spending pledges would push up the federal budget deficit. Trump’s plans would increase the deficit by a net $4.1 trillion over the next 10 years, while Harris’ would raise it by a net $2 trillion, according to estimates by the University of Pennsylvania’s Penn Wharton budget model.

Other tax and budget specialists estimate that Trump’s tax plans would cost as much as $10.5 trillion over a decade.

Congressional appetite

Gary Cohn, who ran the White House’s National Economic Council under Trump, said he doesn’t see “a lot of appetite” in Congress for ballooning the deficit.

“I do think there is growing opposition in both the House and the Senate and, I would say, both sides of the aisle for a large deficit tax plan,” Cohn, now vice chairman at International Business Machines Corp. and a former president and chief operating officer of Goldman Sachs Group Inc., said on Face the Nation.

Trump, the self-declared “tariff man,” has described threats of higher duties as part of negotiating tactics to win concessions.

“I can’t believe how many people are negative on tariffs that are actually smart,” Trump said in a Bloomberg interview in June. “Man, is it good for negotiation.”

Vance echoed that approach on Sunday.

“Sometimes you’re going to have to do higher tariffs, sometimes you might be able to do lower tariffs,” he said. “You use that as part of the negotiation.”

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Accounting

Staten Island’s Malliotakis open to $30K SALT cap

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Representative Nicole Malliotakis said increasing the state and local tax deduction cap to $30,000 from $10,000 would reduce the tax burden of the vast majority of people in her district, indicating support for a proposal that is dividing Republicans.

“Every member needs to advocate for the particular needs of their district. Tripling the deduction to $30,000 will provide much-needed relief for the middle-class and cover 98% of the families in my district,” Malliotakis, a Republican representing Staten Island, New York and a member of the House tax committee, said in a statement to Bloomberg News on Friday.

Malliotakis’ nod of approval for a $30,000 SALT deduction cap comes as Republicans are fighting among themselves about how high to increase a tax break that has the potential to scuttle President Donald Trump’s entire tax package.

House Speaker Mike Johnson on Thursday said the $30,000 write-off limit is one of several options being discussed. That figure was rejected by several other New York Republicans, including Elise Stefanik, Nick LaLota, Mike Lawler and Andrew Garbarino. California’s Young Kim also rebuffed the idea.

Malliotakis’ district has less expensive property values and lower incomes than some of the other lawmakers pushing for a SALT expansion, making it politically viable for her to accept a lower cap than some of her colleagues.

White House Press Secretary Karoline Leavitt suggested on Friday that Trump would not weigh in on an appropriate level for a SALT cap, leaving it to lawmakers to resolve.

“There’s a lot of disagreement on Capitol Hill right now about the SALT tax proposal, and we will let them work it out,” she told reporters.

House Republicans’ narrow majority means that Johnson needs to win the support of nearly all his members to pass Trump’s tax-and-spending package. 

Several of the SALT advocates have said that they are willing to block the bill unless there is a sufficient increase to the deduction. However, most members have not publicly stated how high the deduction must be to win their support.

The debate over SALT has proved to be a particularly thorny fight because it is a political priority for a small but vocal group of Republicans representing swing districts critical to the party maintaining a majority in the 2026 midterm elections. 

Expanding the write-off is an expensive proposition, and Republicans have little fiscal wiggle room as they are sparring over ways — including cuts to Medicaid and levy hikes on millionaires — to offset the cost of the tax-cut package.

The House Ways and Means Committee is slated to consider the tax portion of the bill on Tuesday, including SALT changes.

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GOP eyes endowment tax hike in escalation of Ivy League feud

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House Republicans are considering increasing taxes on university endowments, a significant threat to some of the nation’s wealthiest schools as President Donald Trump seeks to tighten control over American higher education.

The measure is in a draft of the tax package Republicans are weighing, according to people familiar with the matter who spoke on condition of anonymity to share details on the effort. The proposal would create a tiered system of taxation so that wealthy colleges and universities pay more as the size of their endowment grows, the people said. 

Republicans are considering boosting the 1.4% endowment tax currently on the books to rates as high as 14% to 21%, a person familiar with the matter said.

The bill is not finalized, however, the people cautioned, and the draft could change as Republicans negotiate its terms, a complex task as the party looks to renew and expand tax breaks and find ways to pay for them with only a narrow House majority.

Targeting university endowments would be a major escalation of Trump’s fight with elite colleges and universities, which has seen the administration demand changes to school policies that reflect his priorities. 

The current tax on private-school endowments ensnares many of the richest universities, like Harvard University and Yale University, as well as smaller elite institutions such as Amherst College and Williams College. Some of the wealthiest private colleges in the country boast endowments of at least $500,000 per student. 

Harvard, in particular, with a $53.2 billion endowment, has been locked in a high-stakes fight with the Trump administration over its demands for changes at the school. Harvard has sued several U.S. agencies and top officials for freezing billions of dollars in federal funding. Trump has also threatened the school’s tax-exempt status, though experts say revoking that designation would be a lengthy process involving the Internal Revenue Service and the courts.

A new poll by AP-NORC out Friday shows a majority of Americans disagree with Trump’s demands that higher-education institutions make curriculum and cultural changes or face the loss of federal funding for scientific and medical research or have their tax-exempt status threatened.

The poll found that 62% of Americans support maintaining federal research funding, 72% believe “liberals, students and professors can speak freely to at least some extent,” and 84% are concerned at some level about the cost of tuition, an issue Trump has not focused on.

Trump’s 2017 tax package, which Republicans are moving to renew, implemented an endowment levy of 1.4% on net investment income, similar to one that private foundations pay. That levy generated more than $380 million from 56 colleges or universities in 2023 — though it affected just a small fraction of the 1,700 private, nonprofit US schools. 

House Budget Committee Chairman Jodey Arrington floated a long list of possible budget cuts in January that included raising $10 billion over 10 years by raising the endowment tax to 14%.

Discussions over the Republican tax package are reaching a critical stage. Trump is meeting Friday with the chair of the House Ways and Means Committee — the chamber’s tax-writing panel, according to people familiar. 

Trump and Representative Jason Smith will discuss the draft proposal. The committee is expected to release parts of the bill later this afternoon and the rest of the draft on Sunday night or Monday, the people said.

One of the people familiar cast the effort as a bid by Republicans to ensure that universities spend their endowments on their students and not on other initiatives disfavored by conservatives, such as diversity, equity and inclusion efforts or on challenging the Trump administration’s policies.

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Accounting

PCAOB posts more staff presentations on QC 1000

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The Public Company Accounting Oversight Board posted more staff presentations to help with the implementation of QC 1000, A Firm’s System of Quality Control.

The videos cover roles and responsibilities, ethics and independence, people resources, and technological and intellectual resources. In April, the PCAOB posted more staff presentations covering acceptance and continuance, engagement performance, governance and leadership, and information communication. 

PCAOB logo - office - NEW 2022

The roles and responsibilities video covers the requirements involving the assignment of roles and responsibilities within the firm’s QC system. The ethics and independence video covers the firm and individual responsibilities under ethics and independence requirements applicable for engagements performed under PCAOB standards. 

The people resources video covers the firm’s responsibilities when employing people resources to the design, implementation and operation of the QC system. Finally, the technological and intellectual resources video focuses on the firm’s responsibilities when employing technological and intellectual resources in the QC system.

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