Republican lawmakers on the House Budget Committee are preparing for a broad reconciliation bill expected this year, including more than 200 budget cuts, tax cuts, tariffs and programs like Medicare and Social Security, according to documents shared with The Hill. We are considering the possibility of changes.
Different policy options are broken down by committees, and proposals are assigned monetary amounts for how much they would reduce or add to the budget deficit over a 10-year budget horizon.
The document includes estimates for President-elect Donald Trump's across-the-board tariffs, individual tax cuts he proposed during his campaign, changes to the state and local tax (SALT) deduction, changes to the corporate tax rate, and tax cuts. Democrats' climate change-focused Inflation Reduction Act, among others.
Many of the tax proposals relate to the expiration of the 2017 Trump tax cuts, but there is no mention of expiring marginal tax rates or standard deductions, suggesting that an extension may be being considered separately. are. Making permanent the 2017 tax cuts, which would have increased the budget deficit by $4.6 trillion, is a top priority for Republicans, according to the Congressional Budget Office.
Budget Committee documents peg President Trump's general tariffs at 10%, projecting them to generate $1.9 trillion in revenue over the next 10 years. President Trump recently proposed creating an external revenue service separate from the Internal Revenue Service (IRS) to collect customs revenue.
It also proposes codifying and raising tariffs on China in an effort to reduce the deficit by $100 billion.
The plan offers multiple options for capping the SALT deduction, one of the most controversial tax provisions in the Republican conference. In 2017, the cap on the SALT deduction was set at $10,000, angering not only Democrats but also many Republicans in blue states.
SALT options include fixing the $10,000 cap, raising it to $15,000, eliminating the income tax and sales tax portions, and eliminating the deduction entirely. A complete repeal of SALT would reduce the deficit by about $1 trillion. The total debt in the United States currently stands at approximately $36 trillion, of which approximately 20% is effectively borrowed money by the government.
The plan considers lowering the corporate tax rate to 20% at a cost of $73 billion and 15% at a cost of $522 billion. It also proposes eliminating in 2022 the IRS enforcement funding that Democrats gave away at a cost of $46.6 billion.
Budget estimates are also provided for tax cuts that Trump proposed during his campaign. It would cost $106 billion to cancel the tax on tips, $750 billion to cancel the after-hours tax, and $61 billion to create the auto loan interest deduction. The plan also considers repealing the inheritance tax and repealing the Inflation Control Act's alternative minimum tax on corporations.
Accountants say they expect the incoming administration to move more quickly on tariffs than broader tax changes.
“While it was thought that the expiration of tax cuts would dominate the policy discussion in the first 100 days, another levy, the customs duty, may take center stage,” said Rema, vice chairman of tax at accountancy firm KPMG. Mr. Serafi said in the commentary.
The plan also considers a new border adjustment tax. The tax would generate $1.2 trillion in revenue over the next 10 years.
