Economist Stephen Moore joined Chicago’s Morning Answer this week to offer his analysis of the latest federal tax reform proposal emerging from Congress—one that aims to make many of the Trump-era tax cuts permanent while introducing new provisions to support school choice and limit taxation on tips and overtime income.
Moore, co-author of The Plan to Unleash Prosperity and a longtime economic adviser to former President Donald Trump, praised the bill overall, giving it a solid “B” grade. He emphasized that while it isn’t perfect—particularly in its failure to eliminate longstanding green energy subsidies or make further cuts to the corporate tax rate—it includes several important provisions that would empower families, reduce federal overreach, and support economic growth.
A major highlight, according to Moore, is the proposed $5 billion federal scholarship program, which would allow taxpayers in every state to receive a dollar-for-dollar tax credit for contributions to scholarship-granting organizations. The funds could be used to help parents pay for private school tuition, offering an alternative to what Moore described as “rotten public schools,” particularly in cities like Chicago.
Moore also pointed to the bill’s continuation of full capital expensing and opportunity zones as key pro-growth features. However, he expressed disappointment that it lacks expanded Health Savings Account (HSA) provisions and maintains certain Green New Deal-era energy tax breaks, which he argued have become permanent giveaways rather than temporary boosts to fledgling industries.
The Senate version of the bill maintains the $10,000 cap on state and local tax (SALT) deductions—an unpopular provision for high-tax states like Illinois, New York, and New Jersey. Moore defended the cap, arguing that removing it would only incentivize states to raise taxes, knowing the federal government would absorb the political cost. He criticized state leaders for perpetuating high tax burdens and encouraged voters to demand accountability at the local level.
Moore also warned that the bill does not go far enough in tackling America’s long-term fiscal challenges. He cited the country’s $37 trillion national debt and $522 billion in annual welfare-related improper payments as signs of systemic dysfunction, especially in Medicaid programs for able-bodied, childless adults. He called for much deeper spending cuts in future legislation.
Despite these criticisms, Moore believes the bill is a significant improvement over previous proposals and offers needed tax relief to most Americans. He noted that approximately 85–90% of Illinois taxpayers would receive a tax cut under the plan. Combined with recent wage growth—2% in the first five months of the year, the strongest increase in six decades—he described the economic outlook as brightening, giving the overall economy a “B+” rating.
Looking ahead, Moore expressed cautious optimism about potential trade deals with countries like the UK, India, and possibly even China, though he stressed the need for rigorous enforcement of any agreements. He closed the interview on a hopeful note, saying that if the tax bill passes and trade tensions continue to ease, the market could see significant gains in the coming months.