Within the first month of President Trump's second term, the nation has witnessed several executive actions relating to tax and tax administration that affect American businesses and consumers. This article summarizes some of these early executive orders that touch on tax.
OECD
One of President Trump's day 1 executive orders was The Organization for Economic Co-operation and Development (OECD) Global Tax Deal. President Trump notified the OECD that the Biden administration's commitment to the Global Tax Deal will have no force or effect within the United States absent an act of Congress. The Global Tax Deal is the outcome of efforts by OECD countries to address the perceived tax abuses of base erosion and profit shifting by multinational corporations. The executive order also instructs Secretary of Treasury Scott Bessent to investigate whether any foreign country is not complying with tax treaties or tax rules in place with the United States "that are extraterritorial or disproportionately affect American companies." At this time, it is unclear how the Trump administration will determine which tax policies are extraterritorial or disproportionately affect American companies and how it will implement this executive order.
Tariffs
Another day 1 order, America First Trade Policy, indicates that his administration will review trade policies and implement a robust and reinvigorated trade policy that promotes investment activities and prioritizes American businesses and workers. The executive order also instructs Secretary Bessent to investigate whether any foreign country subjects U.S. citizens or corporations to "discriminatory or extraterritorial taxes." President Trump's initial set of tariffs imposed on Canada and Mexico have been put on hold, and China has responded to the 10% U.S. tariff on all Chinese products with a retaliatory tariff targeting U.S. agriculture and natural gas, effective as of February 10. On February 10, President Trump signed a proclamation imposing 25% import duties on steel and aluminum. On February 13, President Trump declared that the value added tax ("VAT") system resembles a tariff, and signed a memorandum that directs his advisers to calculate all costs of doing business with another country and craft reciprocal tariffs to equalize trade deficits. EU lawmakers have promised to respond firmly and swiftly to these tariffs.
Changes To The IRS
President Trump also signed executive orders aimed at curtailing and reorganizing the executive federal workforce: Hiring Freeze ("Hiring Freeze EO"), Return to In-Person Work ("RTO EO"), and Establishing and Implementing the President's "Department of Government Efficiency" ("DOGE EO").
The Hiring Freeze EO will be in effect for the IRS until Secretary Bessent terminates it.
The RTO EO mandates all executive departments and agencies to take necessary steps within 30 days to terminate remote work arrangements and require employees to return to work in-person on a full-time basis. On January 28, the OMB offered deferred resignations by email to all federal employees in the executive branch, offering full pay and benefits until September 30 if they have resigned by February 6. The American Federation of Government Employees, the largest federal employee union, has filed a complaint based on the Anti-Deficiency Act, which prohibits agencies from spending money before congressional approval. IRS employees who are critical for the tax filing season, who constitute approximately half of the IRS workforce, are exempt from the deferred resignation program until mid-May.
The DOGE EO created the Department of Government Efficiency ("DOGE"). Secretary Bessent granted DOGE access to the Bureau of Fiscal Service's payment system, which alarmed many lawmakers and taxpayers because the Bureau handles all federal payments including collections, tax refunds, payments to federal employees and Social Security and Medicare benefits. In response to the DOGE EO, the House Ways and Means Democrats announced on February 7 that they will file a resolution to demand that the administration answer key questions about DOGE's access to taxpayers' data. On February 11, 2025, President Trump signed another executive order, Implementing the President's "Department of Government Efficiency" Workforce Optimization Initiative, that expands DOGE's power to launch a workforce optimization initiative that includes asking agencies to "promptly undertake preparations to initiate large-scale reductions in force."
Within a month of taking office, President Trump has signed executive orders and memoranda that promise to reshape domestic and foreign tax policies. We will continue to monitor these developments and provide updates in Brass Tax.
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