Attempting to Extend the 2017 TCJA Tax Breaks
What is Necessary for Republicans to Extend 2017 Tax Cuts?
The tax cuts in the 2017 TCJA were supposed to pay for itself in stimulation of the economy. The TCJA was passed using the Reconciliation Act. It never did pay for itself. So now Republicans are working on cuts to social programs to keep the cuts that favored the upper one percent of tax payers. Some detail:
- Households with incomes in the top 1 percent receive an average tax cut of more than $60,000 in 2025. Households in the bottom 60 percent, will receive an average tax cut of less than $500 for households. Tax Policy Center (TPC).
- Trump and Republican’s TCJA is expensive and further eroded the U.S. tax revenue base. In 2018 it was calculated the 2017 law would cost $1.9 trillion over ten years. More recent estimates show making the law’s temporary individual income and estate tax cuts permanent would cost another roughly $400 billion a year beginning in 2027.
- Together with the 2001 and 2003 tax cuts enacted under President Bush (much made permanent in 2012), the law has severely eroded our country’s revenue base. Revenue as a share of GDP has fallen from about 19.5 percent in the years immediately preceding the Bush tax cuts to just 16.3 percent in the years immediately following the Trump tax cuts. Revenues expected to rise to an annual average of 16.9 percent of GDP in 2018-2026
- The TCJA failed to deliver the promised economic benefits. Trumpian officials claimed their center piece corporate tax rate cut would “very conservatively” lead to a $4,000 boost in household income. Research of data shows workers earning less than ~ $114,000 on average in 2016 saw “no change in earnings.” The corporate tax rate cut did payoff for top executives. Their salaries did increase sharply.
Hey! If the numbers in the beginning do not catch you eye; maybe, this bar chart will start you to begin to think about the misappropriation of tax cuts to those households with incomes in the upper 5 and 1%. We have a problem here, huge amounts of money to the upper 1% of the population with the highest income did absolutely nothing, zip, nada, etc. They did not spend the money they received as a result of the tax break. They more than likely invested it. So what is plan B?
To reiterate, the Trump TCJA did not work. It did not pay for itself 9 of 10 years ending in 2025. It will not catch up in the tenth year either. So, what did Trump and his merry band of sycophants decide to do.
Balancing the Deficit created by the TCJA
Balance the deficit created by the TCJA by whacking Medicaid recipients. You know he would not take on Medicare recipients or citizens still working. Those people vote and have money (most do!). So the Republican plan is to attack the low-income citizens who rely on some type of public funding.
Republicans in Washington say they plan to use funding cuts and regulatory changes to dramatically shrink Medicaid, the nearly $900-billion-a-year government health insurance program that, along with the related Children’s Health Insurance Program, serves about 79 million mostly low-income or disabled Americans.
The proposals include rolling back the Affordable Care Act’s expansion of Medicaid, which over the last 11 years added about 20 million low-income adults to its rolls. Trump has said he wants to drastically cut government spending, which may be is necessary for Republicans to extend the 2017 tax cuts that expire at the end of this year (2025).
Some Detail to raise Income
“Currently, many noncitizens who entered the country illegally are eligible for federal health care programs including advance premium tax credits and Medicaid,” the memo reads. “This policy would remove specified categories of noncitizens from eligibility for federal health care programs,” with an estimated $35 billion in savings projected over 10 years.
Introduce work requirements for Medicaid recipients. This approach aims to “restore the dignity of work” by requiring able-bodied adults without dependents to meet work requirements to qualify for Medicaid coverage. The work requirements measure requirement would effectively reduce enrollment in the health care program for low-income individuals. The budget memo says this will save an estimated $100 billion over the next decade.
Restrict Affordable Care Act subsidies to only the “most needy Americans,” which would reduce support for lower-income Americans who fall above specific poverty thresholds. This change could save $5 billion over the next decade.
Cutting tax deductions such as state income taxes.
Pass an extension of the TCJA using another Reconciliation.
etc.
In the end what is going on here is to prevent a tax increase and further extend the TCJA tax breaks for corporations.
- The 2017 Trump Tax Law Was Skewed to the Rich, Expensive, and Failed to Deliver on Its Promises | Center on Budget and Policy Priorities