President Trump already has the weight of the executive branch behind his efforts to strip funding from top universities, deport millions of unauthorized migrants and pressure foreign governments to change their economic policies.
With the sprawling bill that passed through the House on Thursday, Republicans are also preparing to enlist the tax code as another tool against Mr. Trump’s political foils.
The legislation, which could change as it heads to the Senate, would raise taxes on universities like Harvard, as well as on immigrants and on companies based in countries with taxes that the Trump administration deems unfair. Owners of major sports franchises, a group that Mr. Trump repeatedly tried and failed to join, would also see a tax increase.
“If you’re an ideological friend of Trump, you’re in generally good shape,” said William Gale, a co-director of the Tax Policy Center, a think tank. “If you’re an ideological foe, you pay more.”
The increases, he added, “feel very punitive.”
Those increases would go toward covering some of the cost of what is otherwise a broad tax cut. But in some cases, the amount of additional revenue the government would derive is relatively minor, while the effect on those targeted with a tax increase could be significant.
Consider Mr. Trump’s feud with Harvard. His administration has choked off federal funding for the wealthy university because the school has not agreed to demands for overhauling campus practices. As part of the fight, Mr. Trump has also called for the Internal Revenue Service to revoke Harvard’s tax-exempt status, a step that could raise taxes on the school but that faces a number of legal complications.
The legislation would go a long way toward raising Harvard’s taxes without stripping it of its tax-exempt status. That is because it would substantially raise an existing 1.4 percent tax that Harvard and other wealthy schools face on the investment returns generated by their endowments. Under a tiered system created in the bill, Harvard would face a 21 percent rate on those earnings, an increase that could cost the school an additional $800 million in taxes each year, according to an analysis by Phillip Levine, an economist at Wellesley College.
While the tax would represent a huge new cost for Harvard and other affected schools, it would raise less than $7 billion in government revenue over 10 years — a pittance compared with the trillions in tax cuts otherwise included in the bill. (Likewise, new limitations on sports owners’ ability to deduct the value of their teams over time would net under $1 billion over a decade.)
Ted Mitchell, the president of the American Council on Education, called the endowment tax increase “wrongheaded and irresponsible.” In a statement, Representative Jason Smith, a Missouri Republican who leads the Ways and Means Committee, framed the tax increase not as a matter of fiscal prudence but as a way to “end insane woke ideology.”
Other tax increases, like rolling back tax incentives for clean energy companies, would raise serious money. A measure that would retaliate against countries that moved ahead with certain taxes on large American companies could generate $116 billion over 10 years, according to the Joint Committee on Taxation. That could further fuel ongoing disputes with Canada and the European Union, which have already been hit with Mr. Trump’s tariffs.
Even with those tax increases and cuts to spending on programs like Medicaid, the legislation is expected to add substantially to the debt. Early estimates put the cost at roughly $2.5 trillion over the next decade, though scorekeepers are still evaluating its cost. That is a reflection of the huge cost of Republicans’ main priorities for the bill: locking in lower tax rates they first passed in 2017, as well as Mr. Trump’s campaign promises to not tax tips or overtime.
Another priority for the Trump administration has been to reduce the number of migrants in the United States, including by trying to scare people in the country illegally into leaving. The bill would take that campaign a step further, cutting off tax benefits to some immigrants in the country legally, as well as American citizens who may live with undocumented migrants.
Currently, under rules that Republicans themselves created in 2017, the child tax credit is available to any family with American children — even if the parent is in the country illegally and does not have a Social Security number. Under the new legislation, Republicans would require both parents to have a Social Security number to claim the credit. That change could result in two million fewer children receiving the benefit next year, according to a congressional estimate.
The legislation would also deny tax credits that help cover the cost of health insurance to some migrants who are in the country legally. And it would impose a new 3.5 percent tax on the remittance payments migrants send to their families overseas.
“They’re saying they’re taking away these benefits from illegal immigrants, but this section solely deals with lawfully present people who are paying taxes into the system and now are going to be denied those benefits,” Representative Linda Sánchez, a California Democrat, said.
One of the tax breaks in the bill would, in Mr. Trump’s view, in fact reward the president’s political opponents. During last year’s presidential campaign, Mr. Trump called for an increase to the state and local tax deduction, capped at $10,000 under his 2017 tax law, a proposal that delighted Republicans in New York and New Jersey who have long pushed to make the tax break bigger.
But as those Republicans held out on supporting the bill, Mr. Trump changed his tune about the deduction. Speaking on Capitol Hill on Wednesday, he said raising the $10,000 cap would only benefit Democrats, and criticized two of them: Gov. Gavin Newsom of California and Gov. JB Pritzker of Illinois.
“Those are the people that want this. And they’re Democrat states; they’re all Democrat states,” he said, suggesting the cap should be unchanged. “I think we’re going to be explaining that.”
Ultimately, the House passed a significant increase in the deduction, raising the limit to $40,000.
Andrew Duehren covers tax policy for The Times from Washington.
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