Tax Policy

Treasury Secretary Scott Bessent on Wednesday accused Colorado, New York, Illinois and Washington, D.C., of refusing to adopt key provisions of President Trump’s One Big Beautiful Bill Act, arguing their residents are being denied tax cuts like “No Tax on Tips,” “No Tax on Overtime,” and a new seniors’ Social Security deduction. Calling the stance “obstructionism,” Bessent urged immediate conformity, said Treasury is ready to help, and warned the department “will not stand idly by” as non‑conformity drags on the recovery.

Treasury and budget data show tariff revenue is far too small to substitute for federal income taxes — FY2025 tariffs are about $195 billion versus roughly $2.7 trillion in annual individual income taxes, and the Tax Foundation estimates current tariff policy would raise about $2.1 trillion over 10 years versus roughly $32 trillion in individual income taxes, calling full replacement "mechanically impossible." Analysts also note a $2,000 "tariff dividend" would cost $300–$600 billion (more than current tariff receipts), a tariff-funded tax cut would mainly benefit high earners, and any such shift would require Congress to rewrite the tax code and faces pending legal challenges.