Republican members of the House Budget Committee have floated a draft list of ideas to cut or increase taxes, or to cut federal spending. Lawmakers must make cuts to pay for the promised extension of the 2017 tax overhaul known as the Tax Cuts and Jobs Act.
“The wide variety of options suggests lawmakers are still debating the best approach to achieve a fiscally responsible and pro-growth package of tax reforms,” Erica York, vice president of federal tax policy at the right-leaning Tax Foundation in Washington, told ThinkAdvisor Thursday in an email.
Some ideas included in the draft “would build on key achievements" of the Tax Cuts and Jobs Act, York said.
The 50-page GOP draft is just the start of the tax reform debate that will take place in the coming months.
For instance, President Donald Trump supports repealing the $10,000 cap on the federal deduction for state and local taxes enacted in 2017. "Eliminating the cap would benefit wealthier taxpayers in high-tax states such as New York, New Jersey and California," the left-leaning Tax Policy Center said Thursday. "Repealing the cap could cost an estimated $1.2 trillion in lost revenue over ten years."
The draft lists a proposal to repeal the SALT cap, another to double it for married couples, and one to increase it even further, illustrating the preliminary nature of the document.
Despite its length, the GOP list "is by no means comprehensive," according to the libertarian-leaning Cato Institute. "It leaves out trillions of dollars in tax and spending savings options that should undoubtedly be part of the conversation. It also includes economically destructive proposals like new tariffs and other tariff-like border adjustment taxes."
Since the TCJA's passage, tax revenue has grown more than expected. But the increase can be explained by inflation and other factors, and chalking it up to the Trump tax cuts could lead lawmakers down a "dangerous path," the Committee for a Responsible Federal Budget said in a just-released analysis.
Extending the expiring provisions of the 2017 tax law "is estimated to cost the government around $4.2 trillion between 2026 and 2035," according to Jeff Bush of The Washington Update, which "raises concerns within the GOP ranks about how the government plans to fund these tax cuts without exacerbating the federal debt, which currently stands at over $36 trillion."
See the gallery for 15 of the tax proposals floated by the House GOP. The savings and costs presented are over a 10-year budget window.
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