Republicans’ Partial Tax Plan to Cost $5 Trillion

An early version of the House GOP’s tax plan would cost nearly $5 trillion, according to a new estimate from Congress’s nonpartisan tax scorekeeper.

The cost far exceeds what is permitted by the budget resolution Republicans adopted earlier this year, which set the parameters for the massive package of tax cuts and extensions, energy policy and border security investments the party wants to pass in the coming weeks.

The estimate, released Saturday evening by the Joint Committee on Taxation, also underscores how much hinges on the final details of the plan, which are likely to be unveiled Monday afternoon ahead of a scheduled Tuesday markup by the House Ways and Means Committee, chaired by Rep. Jason Smith (R-Mo.).

The House Republican-approved budget allows for $4.5 trillion in tax cuts — contingent on the GOP being able to find $2 trillion in spending cuts.

Speaker Mike Johnson indicated last week that House Republicans are looking at a skinnier, $4 trillion tax plan, paired with $1.5 trillion in spending cuts.

The partial text of the tax proposal released by the Ways and Means late Friday would make permanent the individual income tax rates, which are otherwise due to expire at the end of the year. It also would extend and temporarily boost far-reaching tax benefits like the standard deduction and the Child Tax Credit.

But this early, so-called skinny version of the tax bill is otherwise silent on President Donald Trump’s biggest tax priorities he touted on the campaign trail, like his proposal to eliminate taxes on tips. It also bears no mention of the expensive business provisions that Republicans want to restore.

The tax plan also doesn’t at this point include any mention of the state and local tax deduction prized by blue state Republicans in swing districts. Last week, a contingent of House Republicans from New York, New Jersey and California indicated that despite weeks of negotiations it was nowhere close to an agreement to lift the $10,000 cap on the deduction. Republicans established that cap in 2017, which helped raise an enormous amount of revenue for the massive tax bill of Trump’s first administration.

Some observers are interpreting the preliminary figures from the Joint Committee on Taxation to forebode the need to secure large tax increases to offset the costs of the larger bill, which Republicans want to pass through the filibuster-skirting budget reconciliation process.

Among others offsets, Republicans are looking to cut back the clean energy credits from the Democrats’ 2022 climate law known as the Inflation Reduction Act, and increase tax rates on private foundations.

“The deficit impact of the bill is well above the Ways & Means allowable increase of $4.0 to $4.5 trillion, so lawmakers will either need to make adjustments, include offsets, or both,” wrote the Committee for a Responsible Federal Budget in a Saturday evening analysis.