New projections show that extending provisions of President Donald 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.
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, according to the report.
Increased interest costs would add another $467 billion to the deficit.
House Budget Committee Chairman Jodey Arrington, R-Texas, and Ways and Means Committee Chairman Jason Smith, R-Missouri, pushed back on the estimates.
“While the Congressional Budget Office provides a valuable service to the Congress, its track record in predicting the economic and fiscal outcome of the 2017 Trump tax cuts is poor, to say the least,” they said in a joint statement. “The truth is, the Trump tax cuts resulted in economic growth that was a full percentage point above CBO’s forecast, and federal revenues far outpaced the agency’s predictions.”
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.”
Maya MacGuineas, president of the Committee for a Responsible Federal Budget, said the 2017 tax cuts have already proven more expensive than initially estimated.
“Extending the tax cuts will cost at least 10% more than we thought last year and roughly 50% above what we thought back in 2018,” she said. “It’s important we have a competitive and pro-growth tax code. But we can’t borrow our way to prosperity. Enough is enough; it’s time to put our fiscal house in order.”
