Work is about to begin in earnest on the Tax Cuts and Jobs Act (TCJA) of 2017 provisions set to expire at the end of 2025.
With Donald J. Trump returning to the Oval Office, Republicans will have, as they did when the tax reform bill passed eight years ago, control of the House, Senate, and White House.
The only thing that appears to be standing in the GOP’s way is dollars.
Tax cuts’ ongoing costs: Extending the expiring provisions of the Trump tax cuts could cost as much as $4 trillion over the next 10 years, or $400 billion per year, according to one estimate.
While most supporters of the tax cuts might quibble with the amount, there is one Republican contingent that’s focused on costs. The Budget Hawks, whose most hardline (and vocal) member is Texas GOP Rep. Chip Roy, say Congress should find enough spending cuts to pay for continuing the TCJA so that the deficit will shrink rather than expand.
“As we speak, interest rates are going up, our debt is getting refinanced at higher interest rates, and we have more debt. The American people didn’t send us here to keep racking up debt,” Roy told his House colleagues last week.
Budget working memo: In an effort to appease, at least somewhat, members of Congress demanding attention be paid to tax cuts’ costs, the House Budget Committee created a working paper of ways to pay for extending the TCJA provisions and other Trump priorities, such as tariffs and no taxes on tips and overtime earnings.
The document is 50 pages of more than 200 spending cuts, many of them achieved through tax changes. The proposals are broken down by committee, and are assigned dollar amounts for how much they would reduce or add to the deficit through the 10-year budget window.
Those 50 pages (technically 51, but the last one is blank) are this weekend’s By the Numbers figure.
Among its proposals are —
- repeal Affordable Care Act (ACA, or Obamacare) subsidies
- sell federal land,
- reform Medicare,
- reform the Supplemental Nutrition Assistance Program (SNAP),
- eliminate the non-profit tax status for hospitals,
- increase access to rural emergency care services,
- improve senior citizens’ access to telehealth,
- reform the Inflation Reduction Act’s drug policies,
- eliminate the home mortgage interest deduction,
- create an auto loan interest tax deduction,
- make various changes to the state and local taxes (SALT) federal tax deduction cap, and
- repeal many of the Inflation Reduction Act’s clean energy tax credits, including the one for electric vehicles.
Myriad, and controversial, suggestions: Each proposal offers a brief — sometimes very brief and very vague — synopsis of the proposal.
Each also is annotated with a yellow-highlighted line for members to choose the proposal’s viability as high, medium, or low, as shown in the excerpted proposal below from the Ways and Means Committee’s jurisdiction to eliminate the Employee Retention Credit (ERC).
Sen. Ron Wyden (D-Oregon) would circle low on many of the cost-cutting items. The ranking minority member on the Senate Finance Committee, Wyden blasted most of the GOP’s suggestions on social media.
“My staff just got ahold of this memo from House Budget Committee Republicans. It's lengthy and hard to digest but it tells us exactly how Republicans plan to sell out the American people for another round of tax cuts to the rich,” Wyden posted to his BlueSky account.
Wyden characterized the document as a laundry list of cuts to vital services, and continued his post with a thread of the GOP proposals he found most egregious.
Budget Committee members have yet to respond to Wyden’s critical publicizing of the memo.
A chance for bipartisanship: While the document obviously will be political fodder, it’s not a bad idea to consider tax and budget possibilities.
And although this Republican document was leaked, I do hope that the party’s members will be more forthcoming in discussing possible TCJA extensions and other tax matters than they were when they created that tax reform bill back in 2017.
You also might find these items of interest:
- Estate tax planning tips as Trump 2.0 is set to take over
- Want an EV? Buy before Trump eliminates the tax credit
- ERC denial letters arriving as senators seek to expedite or eliminate the business tax credit
Advertisements
🌟 Search Amazon Tax Products 🌟
The text link above is an affiliate ad. If you click through and then buy a product, I receive a commission.
