The GOP’s “tax reform 2.0” would make permanent many of the individual and estate tax provisions in the tax law Republicans passed last fall, which the Congressional Budget Office said would already add about $1.9 trillion to the deficit, factoring for interest costs.
The second round of cuts would cost $631 billion before 2028 and an additional $3.15 trillion in the decade after that, according to the Tax Policy Center. The finding was somewhat larger than the $2.4 trillion cost over 10 years projected by the Tax Foundation, a conservative think-tank.
Republicans gearing up for the mid-term elections have said making the tax cuts permanent would allow Americans to keep more money in their pockets, while critics say they will do little to juice economic growth or raise workers' wages.
The bill would permanently extend cuts in the original GOP law that were originally set to expire in 2025, including the temporary reductions in individual filers’ rates, a doubling of the Child Tax Credit, and cuts to the estate tax paid by about 5,000 of the wealthiest families in America. The Senate is not expected to take up the bill this year, but it could provide a blueprint for Republicans' agenda should they retain control of Congress this November.
TPC also found that the law would give a substantially bigger tax breaks to the richest families over those in the middle class. The richest 1 percent of filers would see an average tax cut of $40,000, while those in the middle 20 percent of earners would see an average cut of $980, TPC said.
Overall, that makes it slightly less regressive than the first round of GOP tax cuts, which included corporate tax cuts that primarily helped richer Americans, according to Rosenberg.
The legislation was debated by the House Ways and Means Committee on Thursday before heading to a vote on the House floor later this month.
“We have to keep building off the momentum from last year’s tax reform,” said Rep. Kevin Brady (R-Tx.), chair of the Ways & Means Committee, at a hearing for the bill on Thursday.
The new package would make permanent a number of provisions passed last fall to raise revenue and offset the cost of the cuts, including the elimination of several itemized deductions and a new $10,000 cap on how much taxpayers can deduct off their state and local taxes.
That policy has garnered criticism from House Republicans in states like California and New Jersey, whose residents are disproportionately hit by the cap, and could complicate the bill’s passage through the lower chamber.
But it also contains several policies that primarily help richer taxpayers, including a large 20 percent deduction for owners of “pass through” entities — companies in which business income is “passed through” to an individual’s tax returns. Democrats have criticized the package as an additional round of fiscal irresponsibility to help the rich, arguing Republicans will later cite the high deficits they caused to cut Social Security and Medicare.
“That will only jeopardize the solvency of Medicare and Social Security for future generations to come,” said Rep. Ron Kind (D-Wis.) on Thursday at the committee hearing.