Tax Foundation Analyst Predicts House Vote Tax Package Could Cost $1.5 Trillion Over Ten Years!
CNS News–The impending House vote on the Tax Relief for American Families and Workers Act has sparked a detailed analysis of its long-term fiscal impact, with a Tax Foundation researcher estimating the cost could reach $1.5 trillion over a decade. This bipartisan tax deal, which includes a significant increase in the Child Tax Credit (CTC), is poised for deliberation, potentially as early as Tuesday.
While the Joint Committee on Taxation (JCT) has assessed the bill’s temporary tax measures based on their textual provisions, the broader financial implications of making these changes permanent have ignited concern among policy analysts. Garrett Watson, a senior policy analyst at the Tax Foundation, emphasizes the disparity between the apparent short-term costs and the potential long-term fiscal ramifications.
The temporary nature of the tax policy, extending only through 2025, masks the substantial costs that permanent adoption would entail. The fiscal burden of such a move could range from $700 billion to $1.5 trillion over ten years, depending on the extent of the current law’s child tax credit included in a permanency package.
This projection far exceeds the gross cost of the interim provisions, estimated at around $80 billion, raising critical questions about the sustainability of such fiscal policies without corresponding offsets to prevent deficit expansion. Further complicating the fiscal landscape is a report from the Committee for a Responsible Federal Budget (CRFB), which projects the tax measures could cost taxpayers $650 billion over the next decade.
The CRFB suggests that curbing excessive disbursements from the pandemic-era Employee Retention Credit (ERC) could mitigate the projected $79 billion expenditure through 2025. However, the proposed tax plan, particularly its provisions and funding mechanisms, has not garnered unanimous support within the Republican ranks.
Critics, especially among conservatives, view the “pay for” clause as a fiscal gimmick and advocate for the elimination of costly green energy tax credits introduced under the Biden administration’s Inflation Reduction Act of 2022. The plan’s enhancement of the CTC, raising it to $3,600 per child, has also faced opposition from members of the hardline House Freedom Caucus, who argue against its applicability to undocumented immigrants filing tax returns with tax identification numbers instead of Social Security numbers.
The discourse surrounding the new tax legislation extends to the State and Local Tax Deduction (SALT), which was capped at $10,000 by the Trump tax reform. The bipartisan tax agreement’s decision to maintain this cap has led to dissent among members of the nonpartisan SALT Caucus, particularly those representing high-tax states, who have pledged to oppose the bill on the House floor.
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As the House prepares to vote on this pivotal tax legislation, the debate underscores the complex interplay between short-term fiscal relief and long-term economic sustainability. The potential implications of the Tax Relief for American Families and Workers Act extend beyond immediate tax breaks, posing significant questions about the future of American fiscal policy and its impact on diverse segments of the population.