Here’s What Happens if Trump Tax Cuts Aren’t Extended

4/10/2025

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Action Summary

Key Issue: Debate over extending the Trump Tax Cuts amid concerns that failure to act would “screw America” by triggering the largest tax hike in history.
Economic Benefits if Extended:
- Real wages could increase by up to $3,300 per year.
- Median-income households might see a take-home pay boost of up to $5,000 per year.
- Short-run real GDP estimated to increase by 3.3-3.8% and long-run by 2.6-3.2%.
- Potential preservation of 4.1 million jobs and up to $100 billion in investment in distressed communities.
Negative Outcomes if Not Extended:
- An average 22% tax increase totaling roughly $4 trillion for taxpayers.
- A $1,700 tax hike for an average family of four.
- Significant reductions including a 50% cut to the Child Tax Credit for 40 million families and halved guaranteed deductions.
- An increased tax burden on 26 million small businesses.
Political and Economic Implications:
- Wide-ranging benefits noted by experts, including liberal economists suggesting that all income groups would receive a tax cut.
- President Trump urges Congress to “pass the one, big, beautiful bill” to drive economic growth, job creation, and manufacturing prosperity.

Risks & Considerations

The potential expiration of the Trump Tax Cuts could lead to significant financial strain on individuals and families, with an average tax hike of 22% and a reduction in the Child Tax Credit. This could impact the disposable income of Vanderbilt University students and their families, potentially affecting enrollment and financial aid needs.
Small businesses, including those that may partner with Vanderbilt for research and development, could face increased tax burdens, potentially affecting their ability to collaborate or fund joint projects.
The predicted economic downturn from not extending the tax cuts could lead to reduced federal and state funding for higher education, impacting Vanderbilt’s budget and financial planning.
Vanderbilt may need to prepare for potential changes in the economic landscape, including shifts in job markets and employment opportunities for graduates, which could affect career services and alumni relations.

Impacted Programs

Vanderbilt’s Financial Aid Office may need to reassess financial aid packages and support services to accommodate students affected by changes in family income due to tax increases.
The Office of Community Engagement might need to increase support for local businesses and communities facing financial challenges due to increased tax burdens.
Career Services could see increased demand for support as students and graduates navigate a potentially volatile job market.
Vanderbilt’s partnerships with small businesses and industries may need to be reevaluated to ensure continued collaboration and mutual benefit in light of potential financial constraints.

Financial Impact

The expiration of the tax cuts could lead to decreased disposable income for families, potentially affecting tuition revenue and necessitating adjustments in financial aid distribution.
Vanderbilt may face challenges in securing funding from small business partners who are impacted by increased taxes, affecting research and development projects.
There could be increased pressure on Vanderbilt to provide financial support and resources to students and families facing economic hardship due to tax increases.
The university might need to explore alternative funding sources or cost-saving measures to mitigate potential reductions in federal and state funding.

Relevance Score: 4 (The potential expiration of the tax cuts presents high risks involving major transformations in financial planning and program adjustments.)

Key Actions

Vanderbilt’s Financial Aid Office should prepare for potential changes in student financial needs due to the impact of tax policy changes on family incomes. By analyzing the potential effects of tax hikes on student demographics, the office can adjust financial aid strategies to ensure continued support for students from diverse economic backgrounds.
The Office of Federal Relations should engage with policymakers to advocate for the extension of tax cuts that could benefit the university community. By actively participating in discussions and providing data-driven insights, Vanderbilt can influence policy decisions that impact its financial stability and growth.
Vanderbilt’s Economic Research Department should conduct studies on the potential economic impacts of the tax policy changes on the local and national economy. This research can provide valuable insights for university leadership and policymakers, helping to shape informed decisions and strategies.
The Center for Entrepreneurship should assess the potential impact of tax increases on small businesses and startups. By offering resources and support to entrepreneurs, the center can help mitigate the negative effects of tax hikes and foster a resilient business environment.
Vanderbilt’s Community Engagement Office should explore partnerships with local organizations to support distressed communities that may be affected by changes in tax policy. By collaborating on initiatives that promote economic development and investment, the university can contribute to community resilience and growth.

Opportunities

The potential extension of tax cuts presents an opportunity for Vanderbilt’s Development Office to engage with alumni and donors who may benefit from increased disposable income. By strengthening relationships and highlighting the impact of their contributions, the office can enhance fundraising efforts and support university initiatives.
Vanderbilt can capitalize on the potential economic growth from extended tax cuts by expanding its research and development initiatives. By investing in innovative projects and partnerships, the university can position itself as a leader in driving economic progress and technological advancement.
The emphasis on boosting real GDP and job creation aligns with Vanderbilt’s Career Center goals of preparing students for a dynamic job market. By enhancing career services and employer partnerships, the center can ensure students are well-equipped to seize new opportunities in a growing economy.
The focus on distressed communities offers an opportunity for Vanderbilt’s Social Work Department to engage in community-based research and interventions. By addressing the needs of vulnerable populations, the department can contribute to social equity and positive community outcomes.
By participating in national conversations on tax policy and economic growth, Vanderbilt can enhance its reputation as a thought leader in public policy and economics. Hosting conferences, publishing research, and engaging with media can further establish the university’s influence in shaping policy debates.

Relevance Score: 4 (The potential tax policy changes could require major process adjustments for Vanderbilt’s financial aid, research, and community engagement strategies.)

Average Relevance Score: 3.8

Timeline for Implementation

Immediate action required upon passage, as indicated by the directive to “immediately pass” the bill.

Relevance Score: 5

Impacted Government Organizations

Council of Economic Advisers (CEA): The report from the CEA forms a central piece of evidence showing the potential economic benefits of extending tax cuts, highlighting its role in economic policy advising.
United States Congress: Congress is directly implicated as the legislative body responsible for passing the tax cut extension, making it a key governmental entity affected by the discussion.

Relevance Score: 1 (Only 1 or 2 agencies, namely the CEA and Congress, are impacted by the text.)

Responsible Officials

Members of Congress – They are called upon to enact legislation extending the Trump Tax Cuts, directly impacting national tax policy.

Relevance Score: 5 (The directive calls on a key legislative body with significant influence over fiscal policy, affecting high-level national decision-making.)