Republican lawmakers say they want to extend former President Donald Trump's tax cuts that will lapse after 2025, but they're undecided on how the estimated $4 trillion cost to do that will be covered, if at all.
No decisions have been made, or likely won't come until after the fall elections determine if Republicans will have majorities in the House or Senate or who wins the race for the White House, but the internal party discussions have already started, reported The Wall Street Journal.
Many argue that the extensions will lead to strong economic growth, so they won't need to be fully funded, but others are seeking ways to cut back on the net cost, including reductions in federal spending or repealing other tax breaks, such as for electric vehicles.
According to the Congressional Joint Committee on Taxation, extending individual and estate tax cuts, in addition to tax changes for businesses, will reduce the national revenue by $4 trillion. This figure comes as $20 trillion in new deficits is being projected.
In 2017, when the current tax law was enacted, the budget deficit was sitting at 3.4% of the national gross domestic product. Since then, spending increases, tax cuts, interest costs, and more have pushed interest rates much higher, and the GDP is often above 5%.
Trump has said he wants to extend the 2017 tax cuts, but he has not outlined a plan for how to pay for them. President Joe Biden is calling for extensions to be offset through hiking taxes on high-income households and corporations.
Rep. Blake Moore, R-Utah, agreed that there is an upper limit for net tax cuts, and said they will need to be "paid for."
"We want them to be responsible as much as possible, but we need strong economic growth and we're going to have to balance it," said Moore, a member of the House Ways and Means Committee.
If action is taken by Dec. 31, 2025, the standard deduction and child tax credit will shrink while marginal income tax rates will rise, resulting in tax increases for more than 60% of the nation's households. Another 9% would see a tax cut.
Meanwhile, in 2017, House Republicans aimed to restructure the tax laws without cutting federal revenues, but eventually shifted to net tax cuts, agreeing on a $1.5 trillion cost that included repealing a domestic manufacturing tax break for corporations.
Rep. Jason Smith, R-Mo., who chairs the House Ways and Means Committee, said recently that some Republican lawmakers are open to raises on the 21% corporate tax rates.
He has created teams to analyze ideas and talk to House members who have come into Congress since 2017 about the trade-offs that were made with the original legislation.
Meanwhile, Democrats say they doubt the Republicans' claims about the deficits and that they will extend tax cuts without any way to pay for them.
"It's a lot of talk but not any action," said Rep. Suzan DelBene, D-Wash. "They come up with excuses about why their tax cuts don't have to be paid for and then they complain about debt or deficit."
Sandy Fitzgerald ✉
Sandy Fitzgerald has more than three decades in journalism and serves as a general assignment writer for Newsmax covering news, media, and politics.
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