This article originally appeared in the Financial Post. Below is an excerpt from the article.
By Jack Mintz, July 31, 2025
Donald Trump’s just-passed One Big Beautiful Bill Act keeps corporate and personal income taxes low, which is good for U.S. competitiveness. But it also produces higher deficits: US$3.4 trillion higher over 10 years, the Congressional Budget Office (CBO) estimates. Republicans argue that tariffs, which were not included by the CBO since they were not part of the bill, substantially fill the gap. The Yale Lab’s July 23rd estimate of new tariff revenues, based on current policy, is US$2.5 trillion for 2026-35, which suggests the tariffs do go a long way toward closing the fiscal gap.
The Democrats prefer personal income and corporate taxes to reduce deficits. The Biden administration’s Budget 2025 proposals would have raised federal taxes by US$3.4 trillion over 10 years. The federal corporate income tax rate would have risen from 21 to 28 per cent, the corporate minimum tax from 15 to 21 per cent and the top personal income tax rate from 37 to 39.6 per cent. The tax on long-term capital gains over $1 million would have climbed from 20 per cent to full inclusion.
So, which is better: higher income taxes or higher tariffs?
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Jack Mintz is the President’s Fellow at the University of Calgary’s school of public policy and a distinguished fellow at the Macdonald-Laurier Institute.
