The cost of extending the 2017 tax cuts for households, small businesses and the estates of wealthy individuals enacted under President Donald Trump has expanded to $4.6 trillion, according to new estimates from Congress's fiscal scorekeeper.
That puts a massive price tag on what is likely to be a top issue in Washington next year as lawmakers grapple with the future of Trump's tax cuts, which are slated to expire at the end of 2025.
Congress will also confront the deficit impact of renewing the cuts, as the US faces as "daunting" fiscal outlook, Congressional Budget Office Director Phillip Swagel said in an interview at Bloomberg News's Washington bureau on Wednesday. Extending the personal income tax cuts will cost $3.8 trillion alone. Other tax cuts set to expire in 2025 include restrictions on the estate tax and valuable write-offs for small business owners.
The Congressional Budget Office's estimate, released Wednesday, is more than double the $1.9 trillion cost of the original Trump tax cuts — a more expansive bill which also included permanent reductions in corporate taxes.
The anticipated cost of extending the tax cuts could move lawmakers to seek ways to offset the deficit impact through spending cuts or by scaling back the size of the rate reductions. President Joe Biden has proposed nearly $5 trillion worth of new tax hikes on businesses and high-earners. Presumptive Republican nominee Trump has pledged to renew the tax cuts, but hasn't released a specific tax plan.
The expiring portion of the tax cuts also includes reductions in individual tax rates and an expansion of the child tax credit. Last year, CBO estimated renewing the sunsetting tax cuts would cost $3.5 trillion.
Economic Growth
Swagel said personal income tax cuts don't stimulate economic growth as much as the permanent business tax cuts.
