President Donald Trump and the “Big Six” Republican tax negotiators rolled out their latest framework for tax reform on Wednesday. On Friday, the first major analysis on it pointed to a potentially major red flag.
One of the issues the plan could face comes from its potential effects on the federal deficit. For years, Republicans have stressed the importance of controlling federal deficits and an exploding federal debt, from debt ceiling brinkmanship to budget fights.
The Urban Institute’s Tax Policy Center found that the Republican tax framework would shrink government revenue by about $US2.4 trillion over its first 10 years. TPC said the decreased revenue from cutting corporate and individual taxes would not be offset by the elimination of deductions.
“Over the first 10 years, the individual income tax provisions — excluding those related to the taxation of corporations, pass-throughs, and estates — would raise $US470 billion, the business provisions would reduce revenues by $US2.6 trillion, and repealing the estate tax would cost another $US240 billion,” said the report.
The analysis did not, however, estimate the potential effects of increased economic growth — a practice called dynamic scoring that the White House and Republicans favour. Most experts believe even with potential growth, the government would add to the deficit.
Some Republicans are already expressing concerns.
“The way we handle our finances, we as a nation are the greatest threat to our nation,” Sen. Bob Corker told The New York Times. “It’s not ISIS. It’s not North Korea. It’s not ascendant China. It’s not Russia. We are the greatest threat.”
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