The American Legislative Exchange Council wants Congress to make the 2017 Tax Cut and Jobs Act permanent.
The group sent a letter to lawmakers urging them to keep former President Donald Trump’s tax policies in place for good. They are set to sunset at the end of 2025.
ALEC said that if Trump’s tax cuts ended, it could encourage some states to increase taxes.
“If the provisions of the Tax Cuts and Jobs Act are allowed to expire, the federal tax base will once again be narrowed because the cap on the state and local tax deduction would be eliminated,” according to the group’s letter. “The return to an unlimited SALT deduction would be an incentive for many states to implement higher taxes and spend at higher levels under the guise of lowering the federal tax burden – a responsibility that ultimately lies with Congress.”
New projections show that extending provisions of Trump’s 2017 tax cut past their sunset dates would add $4 trillion to the federal deficit over the next decade. Extending the individual income tax provisions of the 2017 tax act would add $3.3 trillion in primary deficits through 2034, according to the latest figures from the Congressional Budget Office. The CBO report cited estimates from the Joint Committee on Taxation, the nonpartisan tax policy and revenue estimating service for Congress.
ALEC’s letter said extending the tax provisions would prevent “a massive tax increase.”
“A majority of Americans support making the Tax Cuts and Jobs Act of 2017 permanent,” according to the letter. “Allowing it to expire would result in a massive tax increase on hardworking American taxpayers, a significant decline in American competitiveness, fewer jobs, reduced wage income for workers, and higher prices.”
Some 330 state lawmakers from 42 states signed the letter.
According to the CBO report, most of the individual income tax provisions of the 2017 Tax Act are set to expire at the end of 2025. The expiring provisions affect statutory tax rates and brackets, allowable deductions, the size and refundability of the child tax credit, the 20% deduction for certain business income, and the income levels at which the alternative minimum tax takes effect. Increased interest costs would add another $467 billion to the deficit.
“The 2017 Trump tax cuts boosted wages by nearly five percent and drove down unemployment and poverty to the lowest levels in 50 years,” said House Committee on Ways and Means Chairman Jason Smith, a Republican from Missouri. “At a time when Americans have seen prices skyrocket and higher interest rates, the last thing they need is for Washington to take more money out of their pockets. This will ensure that we build on the success of the Trump tax cuts so working families and small businesses are not struck by a massive tax increase next year but can instead focus on creating a more vibrant and prosperous future for their communities.”
Democrats disagreed. U.S. Sen. Sheldon Whitehouse, D-Rhode Island, said the 2017 tax cuts benefit the wealthy.
“The Trump tax cuts were a gift to the ultrarich and a rotten deal for American families and small businesses,” he said in a statement. “With their impending expiration, we have a chance to undo the damage, fix our corrupted tax code, and have big corporations and the ultra-wealthy begin to pay their fair share.”
