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TaxBuzz Top 5 - Alliance Between Trump, Musk Unravels, TN Tax Refund Sparks Private Prison Controversy & More

by
Rebekah Barton
on
6/6/2025
TaxBuzz Top 5 - Alliance Between Trump, Musk Unravels, TN Tax Refund Sparks Private Prison Controversy & 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. Musk and Trump Clash Over GOP Tax Bill, Sparking High-Profile Feud

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Credit: Tasos Katopodis/Getty Images

The alliance between President Donald Trump and Elon Musk has unraveled over the "One Big Beautiful Bill Act," a sweeping tax and spending package that narrowly passed the House on May 22, 2025. Musk, who previously led the Department of Government Efficiency (DOGE) and was a major Trump donor, denounced the bill as a "disgusting abomination." 

The bill aims to extend the 2017 tax cuts, eliminate taxes on tips and overtime, and increase the SALT deduction cap. To offset these cuts, it proposes reductions in Medicaid and SNAP, stricter work requirements, and the elimination of clean energy tax credits, including those benefiting Tesla. The Congressional Budget Office estimates it would add $2.4 trillion to the deficit over a decade.

Per CNBC, Musk's opposition has sparked a public feud with Trump, who accused Musk of self-interest due to the loss of EV subsidies. In response, Musk called for Trump's impeachment and made unsubstantiated claims linking Trump to Jeffrey Epstein. The fallout has impacted Tesla's stock, which dropped over 10% following the dispute.

The Senate's upcoming vote on the bill remains uncertain, with some GOP senators expressing concerns over its fiscal implications. The Musk-Trump split highlights deep divisions within the Republican Party over economic policy and the influence of prominent business figures.

2. Tennessee Tax Refunds Benefit CoreCivic Despite Prior Penalties

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Credit: Hans Neleman/Getty Images

Tennessee's recent $1.9 billion franchise and excise tax reduction has sparked controversy as CoreCivic Inc., a private prison operator based in Brentwood, received substantial tax refunds despite previous financial penalties. CoreCivic and its affiliate, CoreCivic TRS LLC & Subs, each secured refunds exceeding $10,000, though the exact amounts remain undisclosed due to the state's reporting categories.

According to The Tennessean, this development follows CoreCivic's loss of nearly $45 million in state payments over three years for failing to meet contractual obligations. The lack of transparency in the refund process, with details available online for only 30 days, has raised concerns among lawmakers and the public. Critics argue that such tax breaks favor corporations with political influence, noting CoreCivic's significant campaign contributions to state lawmakers.

The situation underscores the ongoing debate over corporate tax incentives and the need for greater accountability in state financial dealings. As discussions continue, the focus remains on ensuring that tax policies serve the public interest and uphold fiscal responsibility.

3. Chicago Mayor Proposes 1% Grocery Tax to Address Budget Deficit

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Credit: Oscar Wong/Getty Images

Chicago Mayor Brandon Johnson is advocating for a 1% citywide grocery tax to mitigate an anticipated $80 million revenue shortfall in 2026, following the expiration of Illinois' statewide grocery tax on January 1, 2026. The proposal aims to replace the outgoing state tax, not introduce a new one, according to Johnson. Budget Director Annette Guzman warned that failing to implement the tax could exacerbate the city's nearly $1 billion deficit, potentially leading to cuts in essential services, including police funding.

The city council faces an October 1 deadline to enact the tax to ensure continuity in revenue collection. However, procedural hurdles and council recesses may complicate timely approval. Public response has been largely negative, with residents expressing concerns over the regressive nature of the tax and its impact on low-income families.

Over 150 other Illinois municipalities have already enacted similar local grocery taxes. The debate in Chicago highlights the challenges cities face in balancing budgets while minimizing the financial burden on residents.

4. Supreme Court Unanimously Backs Catholic Charities in Religious Tax Exemption Case

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Credit: Monashee Frantz/Getty Images

On June 5, 2025, the U.S. Supreme Court unanimously ruled that Wisconsin violated the First Amendment by denying Catholic Charities Bureau a tax exemption granted to other religious organizations. The decision, per the Washington Post, overturns a Wisconsin Supreme Court ruling that deemed the charity's services too secular for exemption, as they did not involve proselytizing or exclusively serve Catholics. 

Justice Sonia Sotomayor, writing for the Court, emphasized that the state's criteria imposed a denominational preference by favoring religions that proselytize over those that do not. She stated, "It is fundamental to our constitutional order that the government maintain 'neutrality between religion and religion.'" 

The ruling allows Catholic Charities to opt out of Wisconsin's unemployment tax system, aligning with exemptions provided to other religious entities. Legal experts suggest this decision could have broader implications for religiously affiliated nonprofits nationwide, potentially affecting how governments assess tax exemptions for such organizations. 

While religious liberty advocates praised the decision as a victory for constitutional protections, critics expressed concern that it might blur the lines between church and state, potentially leading to broader exemptions for religious organizations from general laws.

5. Senate Republicans Eye Medicare Cuts to Offset Trump Tax Bill Costs

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Credit: Stefani Reynolds/Bloomberg/Getty Images

Senate Republicans are considering cuts to Medicare to help finance the "One Big Beautiful Bill Act," a sweeping tax and spending package endorsed by former President Donald Trump. The House-passed bill, which extends the 2017 tax cuts and introduces new tax breaks, is projected to add $3.8 trillion to the federal deficit over the next decade. To mitigate this, lawmakers are exploring reductions in entitlement programs, including Medicare and Medicaid.

The Congressional Budget Office estimates that the proposed Medicaid cuts could result in at least 11 million Americans losing health coverage. Additionally, the bill would trigger $500 billion in automatic Medicare cuts under the PAYGO rules, unless Congress intervenes. These automatic reductions are capped at 4% of Medicare's annual budget.

The prospect of Medicare cuts has sparked opposition within the GOP. Senator Josh Hawley (R-Mo.) labeled the idea a "terrible" and "crazy" move, highlighting the political risks of altering programs often referred to as the "third rail" of American politics. Despite internal dissent, Trump has reportedly encouraged Republican senators to pursue cost-saving measures in Medicare.

As the Senate prepares to deliberate on the bill, the proposed entitlement cuts are expected to be a focal point of debate, with potential implications for millions of Americans relying on these programs.

Which headline this week most interests you?

Feature Image Credit: Joe Raedle/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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