As the One Big Beautiful Bill Act of 2025 proposes tax relief for individuals, it is also estimated to increase the federal deficit. However, this expert proposes an idea that could help cut trillions of dollars in deficit.
What Happened: Financial commentator Ross Gerber of Gerber Kawasaki has ignited discussion with an X post, proposing to let the “tax cuts” expire and restore full State and Local Tax (SALT) deductions to slash the U.S. federal deficit by trillions.
Gerber targets the One Big Beautiful Bill Act, a House-passed bill extending tax cuts and raising the SALT cap to $40,000, which faces Senate hurdles.
The tax cut bill is projected to add $3 trillion to the national debt over a decade, according to the Committee for a Responsible Federal Budget, a cost Gerber's plan seeks to avoid by letting its provisions lapse.
Restoring full SALT deductions—beyond the bill’s $40,000 limit—could benefit high-tax states like California, where residents often exceed the current $10,000 caps. However, this hinges on new legislation, as the 2017 Tax Cuts and Jobs Act (TCJA) SALT cap remains unless Congress acts.
Why It Matters: The estimates released by the Congressional Budget Office for the distributional effects of the One Big Beautiful Bill Act highlighted that tax changes, including extending provisions of the 2017 tax act, would lead to an increase in the federal deficit by $3.8 trillion.
Meanwhile, the CBO document also underscores a $698 billion reduction in federal subsidies from changes to the Medicaid program and $267 billion less in federal spending for the Supplemental Nutrition Assistance Program (SNAP).
The document also stated, "Household resources would decrease by an amount equal to about 2 percent of income in the lowest decile (tenth) of the income distribution in 2027 and 4 percent in 2033, mainly as a result of losses of in-kind transfers, such as Medicaid and SNAP."
On the other hand, resources would increase by an amount equal to 4% for households in the highest decile in 2027 and 2% in 2033, mainly because of "reductions in the taxes they owe."
Price Action: The SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 index and Nasdaq 100 index, respectively, were higher in premarket on Thursday. The SPY was up 0.34% at $609.18, while the QQQ advanced 0.46% to $543.64, according to Benzinga Pro data.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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