Republicans are on track to hold majorities in both chambers at the start of a second Trump administration, giving the GOP the power to pass a major tax policy bill along party lines.
Trump and many top Republicans are eager to extend tax cuts passed as part of the 2017 Tax Cuts and Jobs Act, which could cost $4.6 trillion, according to a projection by the Congressional Budget Office (CBO).
The president-elect has also proposed a slew of specific tax cuts.
A few examples include scrapping taxes on tips, overtime and Social Security; creating deductions for auto loan interest payments; and even eliminating income taxes, which could cost as much as $15.5 trillion, according to the deficit watchdogs at the Committee for a Responsible Federal Budget (CRFB).
Now Republicans are weighing how far they want to go with additional tax cuts, however, with national debt levels ratcheted up to a new plateau of around 120 percent of gross domestic product following the pandemic.
“If you have a Republican sweep, they’re going to very quickly agree that $3.5 trillion of deficit-financed tax relief is the way to go … but I don’t think it’s going to be quick,” Todd Metcalf, tax policy principal at PwC, said in an interview.
“There’s been a lot of complaining about debts and deficits, and all of those people are just going to vanish?”
“It’s going to take a while to figure that number out.”
The Trump tax cut push could easily run into hurdles in the House, where the GOP is expected to hold a narrow majority that includes fiscal hawks unwilling to sign off on steep tax cuts without additional spending reductions.
“Not all tax cuts pay for themselves, and we should remember we are in most tax policy areas irrefutably on the left side of the Laffer curve,” Rep. Chip Roy (R-Texas) said in a statement to The Hill.
The Hill's Tobias Burns has more here.
