WASHINGTON -- The Concord Coalition said today that the tax legislation considered by the Senate is based on flawed economics, reckless fiscal policy and blatant budget gimmickry. It would worsen the nation’s fiscal outlook and introduce new complexities in the tax code at a time when policymakers should be aiming to lower deficits and make the tax code more efficient.
“This is the wrong bill at the wrong time,” said Robert L. Bixby, Concord’s executive director. “Like its counterpart in the House, the Senate’s tax bill is based on the flawed premise that another trillion dollars or more of new debt is needed to spur higher economic growth.”
He added: “The economy does not need short-term stimulus from a major tax cut at this time. And over the long term, adding more debt to the already unsustainable path of current fiscal policies would act as a restraint on future growth. Revenue-neutral tax reform would not have this problem.”
Projections from the Joint Committee on Taxation confirmed Thursday that the bill does not come close to “paying for itself,” even assuming the tax cuts’ impact on economic growth.This is in line with the thinking of most mainstream economists and nonpartisan budget experts.
“In case there were any remaining doubts, the projections of the Joint Committee on Taxation confirm that this tax legislation will add to the federal debt, which is already quite high by historical standards and is expected to rise rapidly in the coming decade,” Bixby said. “Rather than addressing the nation’s difficult challenges, the tax legislation will make those challenges even harder to deal with.”
In addition, Concord reiterated its concerns about the Senate’s hasty process and the use of budgetary gimmicks to hide the size of the additional borrowing that the tax bill will require. The bill has been rushed through so quickly that it is difficult if not impossible for lawmakers and the public to understand everything that is in it. That makes it even harder to see all the gimmicks that threaten even higher deficits.
The House and Senate legislation both rely on various gimmicks to understate the fiscal damage they would do. For example, certain provisions would theoretically be phased out at some point, but some supporters of the bills have made clear that they will want those provisions to eventually be extended, adding hundreds of billions of dollars in costs.
“We need to make sure that tax reform improves long-term economic growth, raises enough revenue to prevent the debt from ballooning, and does not hide costs with gimmicks,” Bixby said. “The current plans fail all those tests.”
“The Senate and House bills have some significant differences that will need to be reconciled,” Bixby said. “Lawmakers should use this opportunity to reconsider what’s being done and look for a more responsible approach to overhauling the tax code.”