'Revenue Triggers' and Tax Cuts
A newly released JCT analysis estimates that the GOP's tax cut bill would add $1 trillion to the deficit.
On Thursday, the Joint Committee on Taxation (JCT) released its analysis of the Senate GOP’s tax reform bill. JCT estimates that the tax cut’s economic growth will only offset the government’s revenue loss by $400 billion and therefore the bill will add $1 trillion to the deficit over 10 years. While this news is a setback for the Republicans claiming that the bill would pay for itself, it really should have surprised no one that cutting taxes without cutting spending can only increase debt. That said, let’s put this in context: Republicans propose cutting taxes — i.e., letting you keep more of your money — thus adding $1 trillion to the deficit over the next decade, while Barack Obama kept and spent more of your money, adding more than $1 trillion per year to the deficit and $10 trillion over his eight years in office.
Concerns over the deficit had some Republicans (ahem, Bob Corker) proposing the idea of adding a “revenue trigger” to the bill should economic growth fail to significantly offset revenue loss. The measure would have triggered tax hikes on corporations, gradually increasing from the new 20% rate over the next several years. However, the proposal was nixed due to Senate parliamentarian rules. Honestly, any revenue trigger proposal should be aimed at curbing government spending, not increasing taxes. As Ronald Reagan so astutely observed, “The problem is not that people are taxed too little, the problem is that government spends too much.”
To illustrate Reagan’s point, keep in mind that, over the next 10 years, the federal government will rake in north of $40 trillion in revenue. The GOP proposal is to confiscate $1 trillion less over that span.
Meanwhile, the Senate is planning to vote on the bill Monday, and with Sen. John McCain (R-AZ) having thrown his support behind the legislation, hopes are high that it will pass. President Donald Trump and congressional Republicans are banking on a big win.