Ideas for the next GOP reconciliation bill

President Trump’s One Big Beautiful Bill changed the future and delivered historic tax cuts for American households and businesses. Hold on to your hats because there will soon be two more reconciliation bills to reduce and reform spending and reduce taxes on all Americans.

The Big Beautiful Bill was huge. Now families can plan decades into the future when they work, save, and invest. Businesses can hire, increase salaries and wages, and invest in new plants and equipment with certainty in the tax rules governing their decisions.

Life in America can and will get better for workers, families, and job creators.

But there is more to come.

Speaker Mike Johnson and Senate Leader John Thune have both said reconciliation will be used by the Republican Congress and President Trump to further bring down overspending and to reduce job-killing taxes. This fall and probably again next spring.

What will those changes be? Here are some of the reforms that President Trump and Republican lawmakers have supported in the recent past and that have broad public support.

ONE: End the taxation of inflation. Today, when you sell your home, farm, small business, or stocks, you pay taxes not just on the increased value you created but also on the inflation that Joe Biden attached to the “price” of your home/farm/investments. The Biden inflation made every dollar worth 20% less.

If you are old enough, you will also be paying capital gains taxes on the inflation given to us by Jimmy Carter.

Inflation is created by the government and then taxed by the government. Killing the inflation tax can be done by a Treasury rule, but should be buttressed by being passed as a law in reconciliation.

TWO: Expansion of Health Savings Accounts. The GOP can expand health savings accounts (HSAs) to millions more Americans. HSAs introduce competition into healthcare since the dollars in the accounts are controlled by households. They are incentivized to shop around, putting downward pressure on prices.

HSAs offer several key benefits: choice, portability, and cost savings. Workers can choose the providers and treatments that work best for them, rather than being locked into narrow insurance networks. The One, Big, Beautiful Bill made great strides in expanding HSAs, setting the stage for more expansive reforms in upcoming bills.

Potential reforms include allowing seniors eligible for Medicare Part A to contribute to an HSA, allowing HSA funds to go towards qualified fitness expenses, increasing HSA contribution limits, and simplifying rules around HSA contributions. In particular, rolling back laws that bar rolling over unused Flexible Spending Account (FSA) or Health Reimbursement Account (HRA) balances into an HSA, bar HSA participation if one’s spouse has an FSA, and bar married couples from making catch-up contributions to the same HSA.

THREE: Fix the capital gains penalty on mutual funds. Under current law, 120 million Americans invested in mutual funds pay capital gains taxes on the distributions of their fund, even if they are fully reinvested and the investors do not receive them.

The GROWTH Act, introduced by Rep. Beth Van Duyne (R-Texas) and Sen. John Cornyn (R-Texas), would instead defer capital gains taxes on the growth in mutual funds until shares are actually sold by investors, similar to the existing tax treatment of ETFs. Passing the GROWTH Act would promote economic growth, increase investment, and allow households to better save for their retirement.

FOUR: End the double taxation of Americans working abroad. President Trump campaigned on ending the double taxation of American citizens living abroad. The U.S. is one of the few countries that taxes its citizens on worldwide income, regardless of where they live. This places American citizens working overseas at a disadvantage compared to expatriates from other countries, as it is substantially more expensive for a business to hire an American worker. This undermines U.S. economic interests in terms of job creation and increasing exports.

FIVE: Eliminate the 10-11% federal excise tax on firearms. There should not be a federal tax on the Second Amendment right to keep and bear arms. How many Americans are unable to protect themselves and their families because the right to self-defense is heavily taxed? We do not and should not have taxes aimed at the First Amendment, with a federal tax on newspaper subscriptions, and likewise, there should not be a federal tax on the Second Amendment right to keep and bear arms.

SIX: Reduce other federal excise taxes. Let states have such taxes if they must. These are taxes on middle-class Americans. Let the states build and pay for roads.

Some federal excise taxes were imposed to pay for an “emergency” and never went away. For example, the 1898 Spanish American War tax on telephones was imposed when only “rich” households had phones.

The last vestige of this 3% federal excise tax is still in place, and it applies to the local portion of a landline phone bill. You might be surprised to learn that in Pennsylvania, for example, 47% of households still have a landline phone. That’s five million people. They should not have to pay a tax for a war that ended over a century ago. Currently, the swamp simply pockets the tax money from this ancient “temporary” phone tax and puts it into the general fund. Repeal it. It’s a tax that annoys households who see it on their bill each month.

The federal government imposes steep excise taxes on beer, wine, spirits, and tobacco. Every American can do the math to see how a reduction in those taxes would leave them with more dollars in their wallet each week.

The target list for tax reduction and elimination is long. We have one more bite at the apple this fall and again in the spring. Suggestions welcome.

Grover Norquist is president of Americans for Tax Reform.

The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.

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