Donald Trump’s second term hasn’t even hit the 100-day mark, and the president has already made clear that his priority is not fulfilling the promises of prosperity he made to working class Americans on the campaign trail, but ensuring that the wealthy backers who fueled his victory get their payout.
As the Republicans in control of Congress attempt to build out a budget that extends Trump’s 2017 tax cuts while torching spending on government programs, Sen. Elizabeth Warren (D-Mass.) is warning that Republicans are also quietly planning to retroactively gift tech CEOs billions of tax dollars, and using “magic” math to make their numbers work.
Earlier this month, Warren wrote a letter to prominent tech CEOs including Elon Musk, Jeff Bezos, and Mark Zuckerburg decrying the tech industry’s efforts to lobby Congress for major tax incentives — including a retroactive tax break on research and development that may be folded into Republicans planned extension of the 2017 Tax Cuts and Jobs Act (TCJA).
“These billionaires are lobbying Donald Trump to give them a tax break for research expenses,” Warren tells Rolling Stone. “Their argument is, ‘we will have more incentive to do research if you do that.’ The trick is: they want money for research that they finished and paid for years ago. Unless you have a way back machine, there’s no way that a tax break now incentivizes that particular work, but it is a perfect place for the government to write a check for $75 billion to five billionaires.”
The TCJA required companies to write off the costs of research and development over a five year period, instead of a yearly deduction for the full amount. The Joint Committee on Taxation, a congressional committee composed of members of the House Ways and Means Committee and the Senate Finance Committee, estimated that ending the research tax loophole for corporations would generate $119.7 billion in revenue gains between 2022, when the provision went into effect, and 2027. Republicans failed to repeal the rule and retroactively restore the tax break in 2024, but seem poised to succeed under the current GOP controlled Congress.
“This is not a return of taxes paid. This is just money,” Warren says. “These billionaires have invested in Donald Trump. They helped him get elected,” she adds, “so they have cooked up a scheme to get a so-called tax break that’s basically just a $75 billion check from the federal government.”
According to Warren’s letter, a retroactive restoration of the research and development tax loophole could potentially grant Alphabet $24 billion, $22 billion to Amazon, $15 billion to Meta, $10 billion to Apple, and $2.5 billion to Tesla. (Earlier this year, Tesla reported paying out exactly $0 in federal income taxes in 2024.)
This massive cash infusion would come as tax and policy experts predict that an extension of the TCJA would result in another windfall for the ultra wealthy and corporations, while providing minimal gains to low income and working class Americans. Republicans are currently attempting to justify the predicted $4.6 trillion their tax cut for the wealthy will add to the deficit over 10 years with claims that more than $2 trillion in spending cuts and stimulated economic output will budget the balance. Warren says it’s B.S. “magic math.”
“Republicans want to pass a tax giveaway to billionaires, some millionaires, and giant corporations, and the cost would be $4.7 trillion.” she explains, citing predictive models from the Congressional Budget Office (CBO). “The last time they did this big tax giveaway — it was about $2.2 trillion [in] 2017 — Republicans said, ‘Well, we can ignore that, because it will generate more revenue [because ] there will be so much business activity.’”
“The basic argument was ‘this will be free,’ because otherwise, how can you explain it to some middle class family that’s out there working and actually paying taxes on their earnings,” she adds. “It turned out, not only was it not free, it cost more than anticipated and didn’t stimulate any economic activity.”
“The American people didn’t buy it,” Warren says. “In fact, that tax giveaway was so unpopular that Donald Trump reached the lowest point in his popularity for his entire four years up until January 6. That’s how bad that first round tax giveaway to billionaires was.”
Some Republicans, including House Speaker Mike Johnson (R-La.), have recently argued that since the cuts are already in place, and this is simply an extension of existing policy, no additional deficit would be created — an assertion that was rejected last month by the GOP-controlled House Budget Committee. This “magic math,” as Warren calls it, didn’t work before, and it isn’t expected to work this time around.
“That is magic math, and that’s what they’re trying to do, because they desperately want to give a giant payoff to the billionaires and try to fool the American people into thinking that Republicans are fighting for them,” Warren says. “Saying it is free, does not make it free.”
But before Republicans can try and force through their tax proposals, they need to resolve the pending issue of government funding. On Friday, Congress is expected to once again vote on a continuing resolution (CR) to keep the government funded and avoid a full shutdown of the federal government.
While Republican leadership claims that the CR is a clean funding extension free of poison pills and other chicanery, Democrats argue the legislation contains plenty of riders that will allow the GOP to codify major cuts to spending commanded by Trump, Elon Musk, and his so-called Department of Government Efficiency (DOGE).
“This is not a CR,” Warren says. “‘CR’ is Washington speak for we’re just going to hold the budget steady for a few more weeks, or maybe even a month or two — all of the same income, all of the same spending — while we finish negotiating the new budget for next year. That’s what that means. That’s not what this is.”
“This is a new budget,” she continues. “It’s a new budget that cuts billions out of services for veterans, cuts access to health care for old people in nursing homes, cuts home health aides for people with significant disabilities who need help so they can live independently, all driving or paying for giant tax cuts for billionaires.”
Warren plans to vote no on the resolution, which would require a 60-vote majority to pass the Senate. It will probably get there, as Senate Minority Leader Chuck Schumer (D-N.Y.) said on Thursday that he plans to vote with Republicans. Trump praised him for the decision on Friday, but many Democrats are furious that their leader in the Senate caved to Republicans by supporting a bill that will essentially cede the power of the purse to Trump and Musk.
“House Republicans have voted to wipe out the guardrails that Congress wrote for how to spend taxpayer money,” Warren wrote Thursday on X. “Trump and Musk could hold everyone under their magic spell — spend or shut off taxpayer money however they want. Absolutely not. I’m fighting back.”
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