Tax Executive Orders and Proposals Released by the US President
In the latest episode of the Weil Tax Insight series, tax co-chair Joe Pari and international tax head Devon Bodoh highlight executive orders issued by President Trump’s administration, along with various tax proposals referenced both before and after the election.
Executive orders
So far in 2025, there have been two big tax topics:
- one with regard to the OECD and their global tax deal, otherwise known as Pillar Two; and
- one with respect to tariffs.
The OECD’s global tax deal
The executive order (EO) regarding the global tax deal says that global tax can be discriminatory towards the US and US multinational interests. The EO says that the US is not following the OECD’s global tax deal. If a US company is undertaxed, another country could essentially top-up the tax and collect the revenue for themselves.
A US statute from 1954 says that if a tax provision from another country has a disproportionate effect on US companies, the US can take protective measures against that country’s investors in the US.
“…it can double tax for citizens of your country who work in the US.” (3:43)
That is, expatriates living in the US who have nothing to do with digital tax, for example, and maybe do not even know anything about it, would be penalised.
Tariffs
Since the time of recording this podcast, there have been further developments on tariffs. The latest, as of 12 March 2025, is the imposition of 25% tariffs on all steel and aluminium exports to the US.
Previous tariffs enacted, as discussed in this podcast, were 20% total on goods imported from China, and 25% on imports from Canada and Mexico, with exceptions, although there had been a pause on tariffs against Canada and Mexico.
Beijing’s response so far includes imposing new tariffs on US agriculture of 10–15% on chicken, beef, pork, wheat, and soybeans. Meanwhile, Canada’s reaction includes targeting specific parts of the US economy, such as Florida orange juice, dairy and poultry from Wisconsin and Georgia, and bourbon from Kentucky. Furthermore, the EU has announced counter-measures on USD28.3 billion of US goods. Based on the trend, there will likely be further tariff-related changes to come.
The future
Under President Trump, further tax changes include:
- reducing the corporate tax rate from 21% to 15% for corporations producing goods in the US;
- reinstating 100% expensing as opposed to capitalisation and depreciation – this is in the form of bonus depreciation for certain acquired assets;
- eliminating the so-called “carried interest tax benefit” where certain income that investment fund managers and venture capitalists receive – generally income attributable to carried interest greater than three years – is taxed at long-term capital gains rates – currently 20% maximum as opposed to ordinary income rates that are presently 37% maximum; and
- reinstating expensing for certain R&D expenditures conducted in the US – again, that would be as opposed to capitalisation and amortisation/depreciation of those expenses.
Further actions
Other tax-related actions include:
- eliminating taxes on tip income;
- eliminating taxes on social security benefits;
- eliminating taxes on US Americans abroad;
- eliminating taxes on overtime pay; and
- increasing itemised deductions at the federal income tax level for state local taxes that are paid – currently capped at USD10,000.
The various EOs are intended to protect US interests. We shall soon see the extent of the impacts of such EOs, and the further responses in kind, denoting the degree to which the EOs have been or will be effective for the US economy.
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