Early Thursday morning, the House of Representatives passed the “Big Beautiful Bill,” legislation that promises to deliver tremendous victories for Americans—like preventing a $4 trillion tax hike from hitting next year. Now, the legislation goes to the Senate, where lawmakers can improve the bill and make good on more of President Trump’s promises.
Here are five ways the Senate can do just that.
First, the Senate should make the most pro-growth part of the tax cut permanent: business expensing. This allows, for example, a factory to deduct construction costs or the cost of new machinery at the same time a plant is built or as it buys equipment.
Without such a provision, small businesses might have to pay extra taxes up front and then wait up to 39 years before receiving their total tax deduction. Inflation erodes the value of these delayed deductions, making them less valuable than the upfront taxes they’re forced to pay.
That’s effectively a penalty for the business that wants to build a factory and employ Americans.
Instead of simply issuing a temporary reprieve, the Senate should make the relief against this tax penalty permanent. That would encourage companies to reshore manufacturing and conduct more technological development at home—two of President Trump’s chief goals.
Second, the Senate should immediately repeal all government subsidies from the deceptively-named Inflation Reduction Act (IRA)—a bloated boondoggle that exacerbated price increases under former President Biden.
These subsidies give artificial advantages to inefficient solar and wind projects that aren’t viable without such taxpayer-funded gifts. The result? More unstable and unreliable energy sources shoehorned into America’s electricity grid even as more electrical demand is loaded on the system.
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This is a recipe for instability and the kind of blackouts that have plagued California. Repealing these subsidies isn’t just important for economic reasons—it’s also a safety necessity.
Similarly, Biden’s taxes and regulations on reliable energy sources, like natural gas, coal, and oil, should also be repealed.
Although the House bill ostensibly rolls back some of the IRA’s measures, there will be a long delay before most of those changes take effect. Consequently, much of the Green New Scam would be grandfathered in, receiving taxpayer subsidies for years to come.
Third, the Senate should scrap the increase in the State And Local Tax (SALT) deduction. This deduction is almost exclusively a handout to high-income earners in high-tax locations like New York City and San Francisco, effectively serving to shift the tax burden off those folks and onto everyone else.
The deduction is grossly unfair—but it’s also terribly inefficient and does nothing for economic growth. Instead of rewarding people for working harder or being more productive, the SALT deduction rewards fiscally irresponsible municipalities and leaves people in prudent states and cities to pick up the tab—in this case, likely about $400 billion.
Fourth, the Senate should not only cut more wasteful spending from the budget but make those cuts take effect immediately. While the current version of the bill has a few measures to cut down on abuse and fraud in welfare (e.g., by getting over a million illegal aliens off programs), much more can be done.
Over the past five years, both parties’ wanton mismanagement has driven federal spending completely out of control—and something must be done.
When bond markets saw that the House was not going to make significant spending cuts in this bill, yields shot higher. This was the free market’s way of signaling that the nation’s finances are taking a long walk off a short pier.
Today, the federal deficit and debt are getting so out of hand that we’ll soon be paying over $1.8 trillion annually just in interest on the debt—just interest! This is the definition of unsustainable, and the Senate must correct course by stemming the bleeding with meaningful—and immediate—spending reductions.
Finally, the Senate should reduce marginal tax rates on personal income as well as the tax rate on corporate income. This would supercharge growth in the American economy by increasing people’s incentives to work, save, and invest—exactly what happened after the first Trump tax cut in 2017.
Otto von Bismarck once compared the ugly legislative process to watching sausage being made, and the Big Beautiful Bill is no exception. It’s a compromise, meaning no one will get everything they want. But by implementing the commonsense improvements above, the Senate can help get President Trump’s agenda across the finish line, making the end product much more palatable.
E.J. Antoni is Chief Economist and the Richard F. Aster fellow at the Heritage Foundation and a senior fellow at Unleash Prosperity.
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