Cost of GOP tax plan could exceed $2 trillion
The GOP tax bill would cost significantly more if tax cuts that are temporary in the legislation are eventually made permanent, according to two new reports.
Most of the bill’s changes for individuals sunsets in 2025, even as a cut to the corporate rate from 35 percent to 21 percent is made permanent.
If future Congresses decide to extend the lower tax rates for individuals and families rather than allow them to expire, and also extends other temporary provisions, the bill will end up costing $2 trillion to $2.2 trillion, according to a report by the Committee for a Responsible Federal Budget, a nonpartisan deficit hawk group.
Even accounting for economic growth, it predicts the bill would add $1.5 trillion to $1.7 trillion to the debt — bringing debt levels close to 100 percent of the nation’s GDP.
“If expiring provisions are extended and late-stage tax hikes avoided, debt could reach as high as 98 percent or 100 percent of GDP by 2027,” the group said. “In other words, the national debt could exceed the size of the economy.”
Congress’s official scorekeeper, the Joint Committee on Taxation, estimated that the bill would cost about $1.46 trillion over 10 years before factoring in economic growth.
In a separate report, the conservative-leaning Tax Foundation estimated that the tax plan, if made permanent, would cost $2.7 trillion on a static basis and $1.4 trillion using “dynamic” scoring that factors in growth.
“This change would increase the cost of the plan, but also increase the economic growth and dynamic revenue generated by the plan,” the Tax Foundation said.
The think tank estimated that if the tax cuts are not made permanent, the bill lowers federal revenue by $1.47 trillion on a static basis and $448 billion on a dynamic basis.