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TaxBuzz Top 5 - Gov. Newsom Seeks Federal Partnership with Trump, GOP Proposes "Senior Bonus" Deduction & More

by
Rebekah Barton
on
5/16/2025
TaxBuzz Top 5 - Gov. Newsom Seeks Federal Partnership with Trump, GOP Proposes "Senior Bonus" Deduction & More

Each Friday, TaxBuzz brings you the top five tax and accounting headlines you need to know from the workweek. We know life can get busy and you don't always have time to scroll through your news feed to stay informed.

We weed through all of the week's stories to showcase the most important updates in the tax and accounting world.

1. Newsom Proposes $750M Film Tax Credit Amid Budget Cuts, Seeks Federal Partnership with Trump

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Credit: Alexander Ford/Getty Images

Facing a $12 billion budget deficit, California Governor Gavin Newsom has proposed doubling the state's film and television tax credit to $750 million annually, up from the current $330 million. This move aims to revitalize California's struggling entertainment industry, which has been impacted by increased competition from other states and countries offering more attractive incentives. 

The expanded tax credit would extend to live-action and animated series, allocate more funds to independent films, and increase the amount each qualified applicant can receive. In a CalMatters article, Newsom stated, "It's on life support. We need to step things up, and this is all part and parcel of economic recovery, economic growth." 

However, the proposal has faced criticism from both Democrats and Republicans who argue that, in a tight budget year, the state should prioritize essential programs over industry-specific incentives. Assemblymember Corey Jackson, a Moreno Valley Democrat, expressed concern: "I'm not sure the rest of California will be OK with their senior programs, their disability programs, their education programs being cut in order to prop up a regional industry." 

In response to President Donald Trump's announcement of a 100% tariff on foreign-made films, Newsom has also proposed a $7.5 billion federal tax credit program to boost U.S. film production. ABC 7 reported that he expressed willingness to collaborate with the Trump administration, stating, "California built the film industry — and we're ready to bring even more jobs home."

The proposed federal tax credit would be the largest government tax initiative for the film industry in U.S. history and the first at the federal level. While the White House has not yet responded to Newsom's proposal, the initiative has garnered support from industry unions and trade groups who see it as a means to reshore American jobs and stimulate economic growth.

2. Trump’s IRS Nominee Billy Long Faces Scrutiny Over Post-Nomination Donations Used to Repay Personal Debt

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Credit: Natalia Bratslavsky/Getty Images

Former Missouri Congressman Billy Long, nominated by President Donald Trump to lead the Internal Revenue Service (IRS), is under scrutiny following revelations that he received $137,000 in campaign contributions shortly after his nomination. These funds were used to repay a $130,000 personal loan he had made to his unsuccessful 2022 U.S. Senate campaign.

The timing and sources of these donations have raised concerns among ethics watchdogs and lawmakers. Some contributions came from financial advisers affiliated with firms that are currently under investigation for promoting questionable tax credit schemes, including the employee retention credit and tribal tax credits. Notably, Long had professional ties to these firms after leaving Congress, having worked with entities like Lifetime Advisors and White River Energy. 

Senate Democrats, including Senators Elizabeth Warren, Ron Wyden, and Sheldon Whitehouse, have expressed alarm over these developments. In letters to seven companies that donated to Long's dormant campaign, they questioned whether the contributions were intended to influence Long's potential decisions as IRS Commissioner, suggesting they might violate federal anti-bribery laws. 

Jordan Libowitz, vice president of communications for Citizens for Responsibility and Ethics in Washington, commented on the situation in a Missouri Independent article: "The timing of the donations and the explicit knowledge that they'd end up directly in Long's bank account, it's hard to see them as anything other than an attempt to curry favor with the future head of the IRS." 

Long has not publicly responded to these allegations. His nomination remains pending Senate confirmation, with hearings anticipated in the coming weeks.

3. GOP Tax Plan Introduces $4,000 'Senior Bonus' Deduction, Replacing Proposed Social Security Tax Elimination

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Credit: SelectStock/Getty Images

In a significant shift from earlier campaign promises, President Donald Trump's administration has unveiled a new tax proposal that replaces the previously suggested elimination of taxes on Social Security benefits with a $4,000 "senior bonus" deduction for individuals aged 65 and older. This deduction is part of the broader Republican tax and spending bill currently under consideration in Congress. 

The "senior bonus" aims to provide tax relief to older Americans by allowing them to deduct an additional $4,000 from their taxable income. However, this benefit is subject to income limitations: it begins to phase out for individuals earning over $75,000 and couples earning over $150,000. The deduction would be available from 2025 through 2028. 

This approach marks a departure from Trump's earlier pledge to eliminate taxes on Social Security benefits entirely—a move that faced legislative hurdles due to budgetary constraints and the Byrd Rule, which restricts certain provisions in budget reconciliation bills. 

Critics argue that while the "senior bonus" offers some relief, it falls short of addressing the broader issue of taxing Social Security benefits, especially as nearly half of recipients currently pay federal taxes on these benefits. The unchanged income thresholds for taxing Social Security since the 1980s have led to an increasing number of retirees facing tax liabilities. 

Proponents of the new deduction, including bipartisan lawmakers and advocacy groups like AARP, contend that it provides targeted relief to seniors facing rising living costs. Per Kiplinger, they argue that while not a complete solution, the deduction is a step toward easing the financial burden on retirees. 

As the tax bill progresses through Congress, the "senior bonus" deduction remains a focal point of discussions on how best to provide tax relief to older Americans without compromising the financial stability of Social Security.

4. Major Banks Scale Back Equity Derivatives Trading in Paris Amid French Tax Law Uncertainty

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Credit: aristotoo/Getty Images

Several prominent banks operating in Paris are curtailing their equity derivatives trading activities due to uncertainties surrounding France's expanded dividend tax law, according to a recent Bloomberg report. The legislation, which broadens the scope of the existing tax on dividends, has prompted financial institutions to reassess their trading strategies to mitigate potential tax liabilities.

The affected trading activities primarily involve complex equity derivatives transactions that are sensitive to dividend taxation. Banks, including giants like JPMorganChase & Co., Bank of America Corp., and Goldman Sachs Group Inc., are reportedly reducing their exposure to these instruments or relocating certain trading operations to jurisdictions with more favorable tax treatments.

This developing story is a harbinger of how tax policy changes can potentially impact worldwide financial markets, particularly in the realm of sophisticated trading instruments. Market participants are closely monitoring the situation, as prolonged uncertainty could influence the competitiveness of Paris as a global financial hub.

5. Tariff 'Stacking' Pushes Effective Import Taxes Above 30% Despite U.S.–China Truce

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Credit: Henglein and Steets/Getty Images

Despite a recent U.S.–China agreement to reduce headline tariffs, American importers are grappling with cumulative trade taxes—known as "tariff stacking"—that elevate effective import costs well beyond the nominal rates. While the U.S. officially lowered tariffs on Chinese goods from 145% to 30% for a 90-day period starting May 14, 2025, the actual financial burden on importers remains significantly higher due to overlapping duties and fees. 

This stacking effect arises from the combination of multiple tariffs, including the universal 10% import tax, the 20% "fentanyl tariff," and residual Section 301 duties. Even with the temporary reduction, importers face effective rates exceeding 30% on many consumer products. 

The elimination of the "de minimis" exemption, which previously allowed duty-free imports of goods valued under $800, has further compounded costs. Business Insider notes that retailers like Shein and Temu, which relied heavily on this exemption, now confront tariffs as high as 54% on low-value shipments, leading to increased prices for consumers. 

Major retailers, including Walmart, Target, and Procter & Gamble, have announced price hikes to offset these increased costs. Economists warn that the cumulative effect of these tariffs could add approximately $2,800 to the average American household's annual expenses, with inflationary pressures expected to intensify in the coming months. 

While the tariff reductions offer temporary relief, the underlying complexities of tariff stacking continue to challenge importers and consumers alike. As the 90-day truce progresses, stakeholders remain cautious, recognizing that the true cost of imports may remain elevated despite official tariff cuts.

Which headline this week most interests you?

Feature Image Credit: Barry Winiker/Getty Images

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Rebekah Barton

Rebekah Barton

Rebekah's search engine optimization career began completely by accident as a college student. Over the course of her career so far, she has "grown up" with the SEO industry, from writing content while juggling classes to managing her own teams of writers and overseeing SEO strategy in subsequent roles. She is excited to bring her passion for high-quality content to CountingWorks, Inc.

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