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According to his famously short-lived communications director, Anthony Scaramucci, the key to understanding President Trump back in 2016 was not to take his impromptu statements literally but to take them “symbolically.”

Either way, it turned out the biggest mistake was not taking them seriously. Trump’s off-the-cuff remarks on tax policy were one instance when taking him at his word was likely to give listeners a headache, and that is still true today.

For example, when the president says things like he did to podcast host Joe Rogan just before the election about being open to replacing income taxes with tariffs — “Yeah, sure, why not” — the correct interpretation is that he’s intent on raising tariffs. This was confirmed by Trump’s January 20 inaugural address, in which he touted tariffs as the alternative to “taxing our citizens to enrich other countries.” Trump followed this up by declaring that he would establish the External Revenue Service to collect tariffs, duties, and revenues.

The caveat about taking Trump literally does not apply with equal force to the statements he puts in writing. Today we’ll examine an executive order, a White House memorandum, and some scripted remarks to consider what may be in store for tax legislation in 2025.

Executive Ordering

Trump repudiated the Green New Deal in his January 20 executive order, “Unleashing American Energy.” The Green New Deal wasn’t passed in its original form as introduced by Democrats, but many of its elements were incorporated into the Inflation Reduction Act. The executive order criticized “burdensome and ideologically motivated regulations [that]

have impeded the development of these resources, limited the generation of reliable and affordable electricity, reduced job creation, and inflicted high energy costs upon our citizens.” But Trump’s position on the IRA’s tax credits may be more nuanced.

Because the IRA is not synonymous with the Green New Deal, most of the energy tax credits probably aren’t in much danger. In his January 23 teleconferenced remarks at the World Economic Forum in Davos, Switzerland, Trump invited “every business in the world” to “come make your product in America, and we will give you among the lowest taxes of any nation on Earth.” Then he promised to bring taxes down “very substantially, even from the original Trump tax cuts.” Those statements, together with details of the executive order, suggest that the administration isn’t looking to significantly alter the IRA’s credits, save for perhaps the electric vehicle credits.

“Drill, baby, drill” apparently has a new counterpart in the form of “mine, baby, mine.” The executive order announced that the administration’s policy is “to establish our position as the leading producer and processor of non-fuel minerals, including rare earth minerals.” The key words there are “producer and processor.” Last February, Energy Deputy Secretary David Turk explained the state of domestic mining and processing of critical minerals to Congress during what amounted to a post facto hearing on the IRA credits. (Prior analysis: Tax Notes Federal, Feb. 19, 2024, p. 1356.)

China does almost all the processing of graphite that is necessary for individual EV battery cells. As of February 2024, the United States was targeting a 16 percent share of the market by 2027. Lithium and cobalt processing are also done mostly in China. Achieving leadership in the market for minerals like these will likely require even more investment by the United States, and Trump knows it.

In 2017 he issued Executive Order 13817, “A Federal Strategy to Ensure Secure and Reliable Supplies of Critical Minerals,” which struck a different note on U.S. policy, saying it was “to reduce the Nation’s vulnerability to disruptions in the supply of critical minerals.” Leading the production and processing of critical minerals wasn’t mentioned.

Trump’s January 20 executive order also sets out the policy to “eliminate the ‘electric vehicle (EV) mandate’ and promote true consumer choice . . . by considering the elimination of unfair subsidies and other ill-conceived government-imposed market distortions that favor EVs over other technologies and effectively mandate their purchase by individuals, private businesses, and government entities alike by rendering other types of vehicles unaffordable.” In other words, unsurprisingly, the administration wants to put sections 30D, 25E, and 45W on the chopping block. Eliminating those credits would require legislation.

Section 3 orders an immediate review of all existing agency actions that might burden the development or use of domestic energy resources, identifying “oil, natural gas, coal, hydropower, biofuels, critical mineral, and nuclear energy resources” as resources to which the agency heads should pay “particular attention.”

Mapping those priorities onto the IRA tax credits reveals some interesting contrasts, even if it is a perilous exercise in speculation. For instance, blue hydrogen — produced through steam methane reformation of natural gas with carbon capture — might be given greater latitude, and any disappointment in the biogas industry following the release of the final hydrogen and tech-neutral regulations might now be mitigated. (Prior analysis: Tax Notes Federal, Jan. 27, 2025, p. 677.)

A January 20 White House memorandum to the Treasury secretary and others on the administration’s “America First” trade policy addresses the creation of an External Revenue Service. The secretaries of Treasury, commerce, and homeland security are directed to “investigate the feasibility of establishing and recommend the best methods for designing, building, and implementing an External Revenue Service (ERS) to collect tariffs, duties, and other foreign trade-related revenues.”

The memorandum says the Treasury secretary is to consult the others, which seems to imply that the External Revenue Service is supposed to be part of Treasury. As a historical matter, the U.S Customs Service was part of the Treasury Department from its inception in 1789 until 2003, so if customs collections revert to Treasury, it wouldn’t be unprecedented.

Huge Tax Cuts Ahead?

According to Trump’s remarks at the World Economic Forum, Republicans will pass “the largest tax cut in American history, including massive tax cuts for workers and family and big tax cuts for domestic producers and manufacturers.”

That announcement was followed by a bit of optimism: “And we’re working with the Democrats on getting an extension of the original Trump tax cuts, as you probably know by just reading any paper.” Trump can’t unilaterally bring bipartisan tax legislation back, but he can at least court the opposition. Bipartisanship is fine, but making tax bills great again will also require legislative niceties that Congress has dispensed with in recent years, like public preliminary drafts and prevote congressional hearings.

The possibilities floated for individual tax cuts are largely mundane, albeit with some semi-novel twists. Trump is still talking about eliminating income taxes on tips, a promise that the campaign of then-Vice President Kamala Harris and her running mate, Minnesota Democratic Gov. Tim Walz, also adopted. “Your tips will be 100 percent yours,” Trump told a crowd in Las Vegas on January 25.

Other exemptions may be proposed too. Rep. Thomas Massie, R-Ky., said on the social platform X that he loved a proposal he received from a 15-year-old to eliminate taxes on workers under 18. Massie explained his rationale in a numbered list: “1. They need experience to pick a college major 2. They need to develop a work ethic 3. The economy needs more workers 4. They don’t get to vote.” A few details might need to be added to this type of exemption to prevent family businesses from paying too-generous wages to their children. And children who don’t earn more than the standard deduction amount ($14,600 for 2024) wouldn’t benefit, because they don’t owe federal income tax anyway.

The blue-state Republican members of the SALT Caucus still want to raise the $10,000 cap on state and local tax deductions. Trump said on the campaign trail that he’d restore the deduction.

Reducing the corporate tax rate to 15 percent might be the most ambitious piece of Trump’s plans, and it’s unclear how exactly he’ll do it. He told the Davos audience in response to a question from Bank of America CEO Brian Moynihan that “we’re going to bring it down to 15 percent if you make your product in the USA.” Trump said he expected that to create a “tremendous buzz.” The debt limit might also block the president’s tax ambitions, as it is another hurdle for congressional Republicans, and they may need agreement from Democrats.

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