Taxes

The GOP’s Tax Deduction Compromise Would Cost More Than $1 Trillion

JM Ashby
Written by JM Ashby

Given that it's unlikely congressional Republicans will find enough votes among themselves to pass a tax bill that eliminates state and local tax deductions, Republican leaders a considering a compromise that will preserve the state and local deduction for some people.

But their compromise will put their overall tax plan deeper into the red. The conservative Tax Foundation think tank says the GOP's compromise will reduce revenue in the plan by nearly $1.4 trillion.

via Bloomberg:

Limiting the use of the deduction to people with adjusted gross incomes below $400,000 -- a cap that has drawn support from New York Representative Peter King and New Jersey Representative Tom MacArthur -- would raise just $450 billion over a decade, compared to $1.8 trillion if the deduction were fully repealed, said Kyle Pomerleau, director of federal projects at the Tax Foundation. [...]

House Ways and Means Chair Kevin Brady said Thursday that no decisions had been made on what to do with the tax break and that leaders are still considering various ideas.

A trillion here. A trillion there. Who's counting?

Conservatives may admit this will increase the cost of their plan by more than $1 trillion, but it's actually worse than that. All of their estimations are low-balled because they use so-called "dynamic scoring" to assume that economic growth that trickles down will make up for lost revenue.

I think it's just a matter of time before congressional Republican starts floating the idea of passing smaller tax cuts. The numbers they're talking about right now are simply too big.

  • Dread_Pirate_Mathius

    With enough magic asterisks, all things are possible!