Research group says GOP tax bill costs $1.75 trillion
The Penn Wharton Budget Model, a nonpartisan applied research organization, released a report Monday estimating the House GOP tax plan would cost $1.75 trillion over the next decade.
That’s significantly higher than the $1.41 trillion estimated by the Joint Committee on Taxation, Congress’s official scorekeeper for tax bills.
Furthermore, the Penn Wharton Budget Model projects the bill as drafted will cost the federal government $4.39 trillion from 2018 to 2040 — painting a picture of serious federal deficits for the legislation’s second decade, should it become law.
If Congress used the Penn Wharton score, the bill would not comply with the Senate budget resolution, which states that the cost of the bill cannot exceed $1.5 trillion over the next 10 years under a model that does not take into account greater economic activity likely to result from tax reform.
Anything that runs afoul of the Senate’s budget rules would need 60 votes — and the support of at least eight Democrats or independents — to pass the Senate.
Senate Republicans plan to use the Joint Committee on Taxation score instead.
The Penn Wharton model predicts a greater loss of revenue because it bases its estimate on household units, whereas the Joint Committee on Taxation uses tax filers as its base units.
The committee uses an individual tax model, a corporate tax model, an estate and gift tax model and multiple excise tax models, according to a summary of the methodologies provided by the Penn Wharton Budget Model.
The Penn Wharton model projects “rapid demographic changes over the next several years and decades” in reaching its bottom-line estimate.
Still, the Penn Wharton study points to a major hurdle for passing the tax plan through the Senate.
Under Senate rules, a reconciliation bill cannot add to the deficit after 10 years — a threshold the House plan blows past, according to the Penn Wharton analysis.
Senate Republicans are planning to release their own version of tax legislation this week.