WASHINGTON -- The Concord Coalition warned that the tax plan released today by the House Ways and Means Committee is fiscally irresponsible and would create even higher federal deficits than are already projected for the coming decade.
“True tax reform should aim to grow the economy without growing the debt ” said Robert L. Bixby, Concord’s executive director. “This plan would move U.S. fiscal policy in a dangerous direction, openly inviting higher deficits in the face of unsustainable debt.”
“While some special provisions in the tax code are eliminated or reduced to increase federal revenue, the proposed tax cuts are so deep that they would cancel out that revenue gain and require additional borrowing,” Bixby said.
The federal debt recently passed the $20 trillion mark, and the Congressional Budget Office (CBO) projects that under current law the government is on track to add more than $10 trillion to that in the next 10 years. This version of the tax plan will add at least another $1.5 trillion onto that projection.
Furthermore, as the details of the plan are analyzed it is likely that some of the politically sensitive choices being made to limit the impact on the deficit will be revisited.
“It is important that any changes made to this draft to accommodate interest group concerns and increase potential support be paid for by reducing tax cuts rather than increasing the number of budget gimmicks,” Bixby said.
The proposed legislation is already using some well-worn timing gimmicks, such as gradually phasing the cuts in to make their 10-year costs appear smaller or prematurely sunsetting them. If the cuts with sunset provisions are later renewed, the plan will likely add even more to the deficit than the current $1.5 trillion price tag.
The proposal also does very little to simplify the tax code in a way that would increase economic efficiency and support long-term economic growth. In fact some provisions, like the new business pass-through rate, would substantially increase the complexity of the code.
Congressional leaders and President Trump are pushing for quick approval of tax legislation. But undue haste would be unfortunate, particularly with such a massive and complex overhaul of the tax system that has been worked out behind closed doors -- and without the benefit of serious bipartisan discussion.
At a minimum, lawmakers should make sure they understand what they are voting on and give the CBO time to provide careful estimates of the fiscal and economic impacts that proposed measures would have.
Using some revenue-raisers to pass legislation that increases deficits overall would represent a lost opportunity for real tax reform that would boost economic growth and start reining in the federal debt.
Media Contact: Steve Winn, [email protected], (703) 254-7828