The staff of the Joint Committee on Taxation [JCT] determined that provisions in the Chairman’s amendment would increase deficits over the 2018-2027 period by $1.4 trillion (not including the macroeconomic effects of enacting the legislation). By CBO’s estimate, additional debt service would boost the 10-year increase in deficits to $1.7 trillion. CBO’s June 2017 baseline projects that debt held by the public in 2027 will be 91.2 percent of gross domestic product. As a result of those higher deficits, debt held by the public in that year, under H.R. 1, would be about 6 percent greater, reaching 97.1 percent of gross domestic product.Oh, the Joint Committee on Taxation didn’t account for the fact that when you put things on your credit card, that there’s extra interest that you have to pay back? OOPS!
This is a big deal for a few reasons, not the least of which is due to the fact that having a cumulative deficit of over $1.5 trillion makes it impossible for any bill to pass the Senate, as Yahoo News explains.
Republicans are banking on passing tax reform through the process known as reconciliation, which allows them to use only a simple 51-vote majority in the Senate but also limits the bill to increasing the deficit by no more than $1.5 trillion by 2027.If the deficit increases by over $1.5 trillion, then 60 votes in the Senate are needed to avoid the bill being shut down by filibuster. And in a Senate that’s split 52-48 between Republicans and Democrats, they ain’t getting 60 votes for this regressive piece of trash.
It’s also worth mentioning that the $1.7 trillion in deficits are ON TOP OF a bad budget outlook for the next 10 years. Even though the CBO projects the deficit to fall by $103 billion in 2018, that number would quickly jump in the following years, with annual deficits going over $1 trillion within 4 years, and continuing to grow from there.
By the way, note the drop in the deficit in 2023 and 2024? That’s not for a good reason, as the Center for Budget and Policy Priorities tells us.
Specifically, the JCT estimates of the individual and business provisions show tax increases for: filers with incomes between $20,000 and $40,000 from 2023 to 2025; filers with incomes between $20,000 and $30,000 in 2027; and filers with incomes between $200,000 and $1 million in 2023. (JCT also presents the effects of the individual and business provisions separately. These tables show that the business tax provisions would increase taxes for all income groups in 2023, while individual income taxes would increase for filers with incomes between $20,000 and $40,000 in 2023 and each year after; and for filers with incomes between $200,000 and $500,000 in 2023 and each year after.) These tax increases would likely be due to:On the flip side, the estate tax goes away entirely after 2023,which helps to explain the rising deficit in later years, along with the aging of the country resulting in many more Boomers being on Social Security and Medicare by 2027. And naturally, the Trump/GOP tax plan has no idea how to pay for these extra needs, other than to wish for the voodoo of dynamic growth that has never happened since the top taxes on the rich were dropped below 70% with Reagan.
Letting a key individual income tax provision expire in 2023. The bill would repeal (immediately and permanently) personal exemptions, and increase the 10 percent tax rate to 12 percent for many households. To protect households from the increased taxes they would otherwise face largely due to these provisions, the bill includes a $300 credit that could be claimed for each non-child dependent. But this provision would expire after 2023 — so many families would then face tax increases.
Moving to the chained CPI. As mentioned above, the bill adopts the chained CPI to adjust tax brackets and other key elements of the tax code. The chained CPI grows more slowly than the inflation measure used under current law, and, over time, would increase taxes roughly proportionately across the income distribution. The effect of this provision would take time to accumulate.
Timing shifts and expiring business tax provisions. The business tax provisions include one-time revenue raisers (such as a one-time tax on multinationals’ foreign profits), provisions that the bill would sunset (“full expensing”), and other new provisions in the bill whose impact on revenues would not be steady over time.  (This time pattern likely explains why JCT estimates that businesses taxes would rise in 2023 across all income groups: on net, the 2023 calendar year would be the least favorable for businesses overall, but after that, the business tax cuts would start to grow again).
And by the way, these CBO budget projections assume a baseline of real GDP growth of 2.2% next year and annual growth of around 1.75% long-term. If we have any kind of recession in those upcoming years (and being that we’ve expanded for 8 years, it’s coming sooner than later), that deficit number will blow up even higher.
Lastly, those GDP growth and budget figures are just totals, they don’t talk about the fact that this tax package would push this country’s crippling inequality even higher. Lower taxes on the rich and the favoring of Wall Street gambling over labor income has led to 40 years of stagnant wage growth for the majority of Americans, and this House GOP tax package would put that destructive trend on steroids. But let's be real, improving the economy or people's quality of life isn't the main motivation behind this tax scam.
.@RepChrisCollins (R-NY) on tax reform: "My donors are basically saying, 'Get it done or don’t ever call me again.'"— Cristina Marcos (@cimarcos) November 7, 2017
The higher inequality and injury to the lower and middle classes from this tax scam becomes especially true if you combine it with the instability that would result from GOP attempts to mess up health care (which may also be part of this bill!). It also seems true if Republicans and/or sellout corporate Dems would use these spiraling deficits to try to cut Social Security, Medicare and Medicaid, or cut assistance to the states (and they would).
Notice I haven’t even touched on the fact that many people are already looking at tax increases under this tax scam due to the limiting and/or removal of certain deductions. And that was just under the “reconciliation” plan that had deficits under the $1.5 trillion cap. Now add in today’s headline where the CBO says the House GOP needs to come up with ANOTHER $200 billion in tax hikes or budget cuts to even have a chance of passing, and it’s time to be even more vigilant as this debate goes ahead.
Or, maybe the Senate GOP will go ahead and try to jam through their own bill, which delays the corporate tax cut until 2019 and has more tax brackets than the House bill. That would set up a scenario where the two houses would then try to figure out which tax bill they want, and if enough votes exist to pass it. That won't be a train wreck, will it?