The Tax Cuts and Jobs Act of 2017, which significantly lowered the corporate tax rate in the United States, is due to expire at the end of 2025. President Donald Trump and his GOP allies in Congress favor extending those cuts, but many Democrats are opposed.
The Tax Cuts and Jobs Act, Democrats critics say, was a major gift to millionaires and billionaires but did little or nothing to help the middle class. Moreover, they argue, the 2017 cuts increased the United States’ federal deficit.
But Democrats may be unable to stop an extension from passing. Republicans have small majorities in both branches of Congress, and according to NBC News’ Sahil Kapur, GOP lawmakers may be able to get around the rules of the Congressional Budget Office (CBO).
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Kapur, in an article published on February 28, explains, “Extending the Tax Cuts and Jobs Act, which Trump signed into law in 2017, would cost $4.6 trillion over a decade, according to the Congressional Budget Office, the official nonpartisan scorekeeper. That’s under the ‘current law’ metric that has traditionally been used, as the tax cuts are slated to expire at the end of this year. But Senate Republicans want to use a different scoring method called the ‘current policy’ baseline, which would assume that extending tax cuts costs $0 because they’re already law.”
Sen. Mike Crapo (R-Idaho), Kapur notes, is among the GOP lawmakers who favors the “currency policy approach,” which, Crapo said, “recognizes that extending current law does not change the tax policy, does not reduce tax revenue.”
Another supporter of the “currency policy” approach is Sen. Ron Johnson (R-Wisconsin), who told NBC News, “We should be using ‘current policy.’ We need to avoid a massive, automatic tax increase. That seems like a perfectly rational thing to do, and there shouldn’t be a score.”
Kapur reports, “Congressional GOP aides say the idea could have a huge impact on what they’re able to pass in the budget bill. If they use the current accounting process, they have no chance of making the 2017 tax cuts permanent, because that would require paying for it. And this process would also be key to unlocking Trump’s other tax proposals, like slashing taxes on tips and overtime pay. It’s a tacit admission that Republican leaders have no expectation of paying for the cost of their tax agenda.”
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Read the full NBC News articles at this link.
