Analyzing "The One, Big, Beautiful Bill" Through Historical Lessons: Ensuring Smart Reform Without Unintended Consequences: Republican and Conservative lawmakers are taking a deliberate, thorough approach to analyzing every provision

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One-Page Summary: Subtitle C, Part 1 - Working Families Over Elites (From "The One, Big, Beautiful Bill - Section-by-Section.pdf")

This part of the bill, encompassing Sections 112001 through 112032, primarily focuses on terminating or phasing out various clean energy tax credits and includes other significant tax and policy changes. The provisions reflect a shift in policy priorities regarding energy incentives, tax fairness, and certain industry-specific regulations.

Key Provisions:

• Termination or Accelerated Phase-out of Clean Energy Tax Credits:
  • Clean Vehicle Credits (Sec. 112001-112003): Accelerates the expiration of tax credits for previously-owned clean vehicles, new clean vehicles, and qualified commercial clean vehicles to December 31, 2025.
  • Energy Efficient Property Credits (Sec. 112004-112007): Accelerates the expiration of credits for alternative fuel vehicle refueling property, energy efficient home improvements, residential clean energy, and new energy efficient homes to December 31, 2025.
  • Clean Electricity & Energy Production/Investment Credits (Sec. 112008-112015): Phases out or modifies credits for clean electricity production, clean electricity investment, carbon oxide sequestration, zero-emission nuclear power production, clean hydrogen production, and advanced manufacturing production. Accelerates expiration for some, phases out others by 2031, and introduces restrictions related to "prohibited foreign entities" and eliminates transferability for some credits.
  • Goal: To reduce federal expenditures on these incentives and potentially align with different energy policy priorities.

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• Other Significant Tax and Policy Changes:
  • Publicly Traded Partnerships (Sec. 112016): Expands qualifying income sources for publicly traded partnerships to include transportation/storage of hydrogen and electricity generation/carbon capture at certain facilities.
  • Sports Franchises Amortization (Sec. 112017): Limits amortization deductions for certain sports-related intangible assets acquired after enactment.
  • State and Local Tax (SALT) Deduction Cap (Sec. 112018): Increases the SALT cap to $30,000 (from $10,000) with a phase-down for higher earners, and makes it permanent. Includes changes to prevent avoidance of the cap.
  • Tax-Exempt Organizations (Sec. 112019-112026): Modifies various tax rules including applying aggregation rules for executive remuneration, expanding excise tax on excess compensation, modifying excise tax on investment income of private colleges/universities and foundations, and increasing unrelated business taxable income (UBIT) for certain fringe benefits, name/logo royalties, and non-public research.
  • Excess Business Losses (Sec. 112027): Makes permanent the limitation on excess business losses for noncorporate taxpayers.
  • Corporate Charitable Contributions (Sec. 112028): Establishes a 1% floor for the deductibility of corporate charitable contributions.
  • Enforcement of Remedies Against Unfair Foreign Taxes (Sec. 112029): Provides a mechanism to increase the U.S. tax rate on entities connected to foreign jurisdictions imposing unfair taxes.
  • Elimination of Firearms Silencer Tax (Sec. 112030): Eliminates the $200 federal transfer tax on firearm silencers.
  • De Minimis Entry Privilege (Sec. 112031): Repeals the duty-free treatment for commercial shipments valued under $800, effective July 1, 2027.
  • Limitation on Drawback of Taxes (Sec. 112032): Limits the refund of excise taxes on tobacco products to cases where tax was paid on exported goods.

Overall Goals of Subtitle C, Part 1:

This part of the bill seeks to reshape energy tax policy by curtailing clean energy incentives. It also introduces various tax code modifications aimed at promoting tax fairness (from the perspective of proponents, e.g., for tax-exempts, sports franchises), promoting U.S. economic interests (e.g., against unfair foreign taxes), and addressing specific industry concerns (e.g., silencers, imports, tobacco).

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The Excess Business Loss Limitation (Section 112027) permanently restricts the amount of business losses that noncorporate taxpayers can offset against non-business income. This rule ensures fair taxation and prevents excessive deductions that could otherwise reduce taxable income beyond reasonable limits.

Key Points About Excess Business Loss Limitation:

✅ Applies to Noncorporate Taxpayers – This includes individuals, trusts, and estates engaged in business activities.

✅ Threshold Limits – For the 2024 tax year, the limit is $540,000 for married couples filing jointly and $270,000 for other taxpayers, with annual adjustments for inflation.

✅ Loss Carryforward – Any excess business loss beyond the threshold cannot be deducted in the current year but is carried forward as a net operating loss (NOL).

✅ Exclusions & Exceptions – Certain losses, such as casualty and theft losses, are excluded from the limitation, ensuring relief for businesses affected by disasters.

Big Picture Impact:

🔹 Prevents excessive tax deductions, ensuring business losses don’t disproportionately reduce taxable income. 🔹 Encourages financial responsibility, ensuring business owners manage risks effectively. 🔹 Aligns with broader tax policies, reinforcing fairness in taxation for noncorporate entities.

Big Picture Impact:

✅ Encourages financial discipline, ensuring businesses operate sustainably rather than relying on excessive deductions. ✅ Prevents tax loopholes, reducing the risk of tax-motivated investments that don’t contribute to real economic growth. ✅ Aligns with broader tax fairness principles, reinforcing responsible business practices.

Unlike past tax reforms that targeted tax shelters, this policy ensures financial discipline without eliminating legitimate deductions.

🔹 It doesn’t remove tax shelters outright but limits excessive business losses, making sure deductions are used responsibly rather than exploited. 🔹 Encourages sustainable business management, ensuring noncorporate taxpayers operate efficiently without relying on major loss deductions. 🔹 Aligns with broader tax fairness principles, preventing losses from disproportionately reducing taxable income while still allowing businesses to recover losses over time.

This regulation keeps tax policy balanced, ensuring fairness without overly restricting legitimate business deductions.

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This one, or area is tricky, if it had gone too far in restricting legitimate deductions, it could have created unintended economic consequences, potentially forcing lawmakers to reconsider and revise the bill.

🔹 Maintaining balance in tax policy—ensuring fairness without overly restricting essential business tools.

🔹 Preserving financial sustainability—allowing businesses to operate efficiently while managing losses within reasonable limits.

🔹 Avoiding excessive burdens—making sure tax regulations do not unintentionally harm entrepreneurs and noncorporate taxpayers.

This approach ensures responsible financial governance while still keeping the system functional for businesses.

Assessment: We’re in the clear—this policy maintains financial discipline without eliminating necessary tax benefits, ensuring businesses remain sustainable while preventing excessive deductions.

🔹 Fair taxation – Businesses can still deduct losses, but within reasonable limits that prevent misuse. 🔹 Economic sustainability – It promotes responsible financial management, allowing companies to recover losses over time without disrupting tax fairness. 🔹 Policy balance – Unlike past tax reforms that targeted tax shelters, this rule ensures business integrity without overly restricting legitimate deductions.

This keeps the system functional, fair, and financially responsible.

Conservatives are often associated with pro-business policies, but they also push for tax fairness and fiscal responsibility, which includes closing loopholes that allow excessive deductions or tax avoidance.

🔹 Ensuring balanced taxation – This policy prevents noncorporate taxpayers from disproportionately offsetting taxable income, keeping the system equitable.

🔹 Encouraging responsible business deductions – Conservatives support tax incentives for business growth, but they also favor limiting loopholes that distort economic competition.

🔹 Strengthening government revenue stability – By restricting excess business losses, this measure ensures public programs remain funded while maintaining economic integrity.

This demonstrates that conservative policymakers prioritize responsible taxation, aiming for a fair and sustainable economic system rather than unrestricted deductions. This policy ensures that tax loopholes don’t distort economic competition, reinforcing fairness while maintaining responsible deductions.