Congressional Republicans are looking at shortening the duration of tax cuts that their plan would give to families and individuals, a leading lawmaker said Thursday.
That change would free up more revenue for additional changes to their tax overhaul, but it could also heighten complaints that the bill prioritizes cuts for corporations over households.
Under a tax overhaul bill passed by the Senate earlier this month, tax cuts for all American households would expire at the end of 2025. But Republicans are now considering having those tax cuts expire in 2024.
“That’s one of the things we’re looking at,” Senate Finance Committee Chairman Orrin G. Hatch (R-Utah) said Thursday when asked about shortening the duration.
“They’re looking at every possible thing they can to meet the revenue needs, as always at the end of the thing we’re looking at everything,” he said.
As GOP negotiators seek to reconcile the House and Senate tax bills, they have in recent days added a number of additional tax cuts and other changes to their plan. The new changes could add more than $200 billion to the size of the package, forcing negotiators to seek new revenue or at least limit the duration of certain tax cuts.
To comply with budget rules, the tax package cannot add more than $1.5 trillion to the federal deficit over 10 years.
A final decision hasn’t been made and Republican negotiators are looking at numerous options. They would like to reach an agreement by Friday, however, as they want both the House and Senate to vote on final legislation next week.
Republicans have said that the expiring tax cuts for families and individuals would eventually be extended by a future Congress because they will prove popular, but they needed to make them temporary to comply with budget rules.
Democrats have complained that the tax overhaul package was already tilted in favor of the wealthy and corporations. Many of the corporate tax cuts would be locked in permanently, while most of the tax cuts for households and families were designed to expire after 2025.
Lower tax rates and exemptions from taxation are among the provisions set to expire, as are other changes that would lower taxes for individuals.
Having the tax cuts for individuals expire a year earlier could trigger even more complaints, but Democrats lack the votes to block the tax overhaul.
As part of final negotiations, Republicans have agreed internally to allow more state and local taxes to be deducted from federal income, a change that could add close to $100 billion to the size of the bill. They also agreed to lower the top income tax rate from 39.6 percent to 37 percent, a change that could add another $100 billion to the size of the bill.
Negotiators are also discussing an expansion of the child tax credit.
Shortening the tax cuts for individuals and families by one year could free up close to $170 billion, according to estimates from the Joint Committee on Taxation, but it could be seen as a budget gimmick if Republicans promise to extend the tax cuts at a later date.