Making Trump’s tax cuts permanent would cost nearly $920B
Extending tax cuts that are intended to benefit families and small businesses come with a steep cost — nearly $920 billion through 2029 — according to Congress’s nonpartisan scorekeeper.
That figure would add to the total cost of the $1.5 trillion tax overhaul Congress passed in 2017, according to the report issued Monday from the Joint Committee on Taxation. The law included an array of temporary tax cuts, including lower individual rates, more generous child tax credits and a 20 percent deduction on profits that pass-through businesses earn.
Those tax breaks will all expire at the end of 2025. President Donald Trump’s fiscal year 2020 budget request called to make those tax cuts permanent.
Democrats criticized the 2017 law because it made tax cuts for individuals temporary, while making corporate tax cuts permanent. The corporate tax changes included cutting the rate to 21 percent and overhauling how overseas profits are taxed.
The temporary tax cuts set up lawmakers for a tough decision at the end of 2025 — extend the expensive tax cuts or raise taxes on families and many small businesses ahead of the 2026 midterm elections.
Congress is likely many years away from prioritizing an extension of those tax cuts. Last year, the House, while still under Republican control, voted to make the individual tax cuts permanent, largely to generate political support going into the midterm elections. The Senate didn’t advance the bill.
Lawmakers of either party have often voted to extend tax breaks just before they’re scheduled to disappear. Members who have decried the changes when they’re initially inserted into the code are generally reluctant to erase all of the benefits years later.
That’s what happened with the tax cuts passed in 2001 and enhanced in 2003 under President George W. Bush. Those cuts were set to expire in 2010, but were extended for two additional years. Then, in the early days of 2013, President Barack Obama and Congress worked out a budget deal to make the tax cuts permanent for most earners.
The decision in 2017 to phase out the individual tax cuts was largely one of necessity — lawmakers needed to fit the tax cuts within the $1.5 trillion loss that Congress allotted itself. At the time, lawmakers publicly said they would vote to extend the tax cuts at a later date.
The numbers from the Joint Committee on Taxation came as new data suggests that the tax overhaul isn’t generating as much revenue as initially anticipated. The Bipartisan Policy Center, a think tank, said there is “significant risk” that the U.S. will breach its debt limit in September, revising an earlier prediction of October to November, as a result of declining corporate tax revenue projections this year.