Amid looming tax hikes for over half of U.S. households, Republican leaders are testing unconventional ways to renew Trump's 2017 tax reforms. By redefining baseline budgets, they hope to neutralize the 4 trillion cost, sidestepping sharp cuts that could enrage fiscal hardliners.
Based on reports, Republicans were apparently resorting to "magical thinking" in order to force through an extension of President-elect Donald Trump's tax cuts from 2017, which were scheduled to expire this year.
With its passage and subsequent signing into law by President Trump in December 2017, the Tax Cuts and Jobs Act was the most comprehensive revamp of the tax system in decades, bringing about significant changes to both individual and corporate income taxes.
Businesses and people alike benefited from tax cuts, foreign tax regulations were reworked, and pass-through income could be deductible thanks to new legislation that lowered the top corporate income tax rate to 21%. They did the same with the estate tax exemption and the standard deduction, raising them.
However, the reforms are scheduled to expire on December 31st, and if they are not renewed, it is possible that more than sixty percent of taxpayers may see an increase in their taxes the following year.
The Republican tax writers are reportedly considering "innovative methods to make the price tag $0" for such an extension, according to a report that was published by Axios on Friday. According to the study, doing so would make it possible for Republicans to avoid cutting $4 trillion out of the budget, which is a strategy that could irritate those who are truly committed to reducing the deficit.
There have been reports that Scott Bessent, who is Trump's choice for Treasury secretary, has stated behind closed doors that he is in agreement that the cost of extending the tax cuts should be zero dollars.
Figuring out how to pay for the expense of extending the 2017 tax code's expiring provisions would be a struggle for lawmakers, costing about $4 trillion. If lawmakers wish to implement further company tax cuts linked to the law, such restoring bonus depreciation, the issue will be even greater.
The House Ways and Means Committee cited a report from the Center for American Progress as the source of the information. Modifying the way in which the impact is computed is one way to mitigate the impact, The Raw Story shares.
"Current policy has the tax cuts in place (at least until the end of the year). Among friends, say Republicans, what if we use current policy as the baseline? Then extending the tax cuts will cost ... zero," Axios wrote, pointing out that the Republican Party is "seizing" a "current policy" stance.
