Congress Should Avoid Costly Tax Cut Holiday Season
According to press reports, policymakers may be close to reaching a bipartisan tax cut deal that would temporarily restore various business tax breaks while temporarily expanding the Child Tax Credit.
The deal would reportedly cost about $100 billion over a decade as scored but could set the stage for over $800 billion in tax cuts.
Expanding the Child Tax Credit by roughly $50 billion retroactive to 2023 through 2025 could cost $180 billion through 2033 if made permanent. Reviving the business tax breaks under discussion would cost about $50 billion through 2025 but would cost closer to $650 billion through 2033 if made permanent.
Congress may also consider additional spending measures in the coming months that could add over $1 trillion more to the deficit if made permanent. See our recent analysis on these policies here.
The following is a statement by Maya MacGuineas, president of the Committee for a Responsible Federal Budget:
It’s hard to overstate the hypocrisy driving this deficit-financed tax cut effort. The politicians warning that deficits are out of control are teaming up with those who are denouncing tax cuts to pass yet another deficit-exploding tax cut bonanza.
2023 has been a good year fiscally – Congress and the President have enacted $1.3 trillion of ten-year deficit reduction – a downpayment on what is needed. With near-record debt levels and exploding interest payments, now is not the time to undermine that progress.
Some will claim this package is necessary to boost business investment and support American children. But without offsets, the higher debt will crowd out private investment and burden our children.
We don’t think voters want Congress to borrow another $100 billion, let alone another $800 billion, and the Committee for a Responsible Federal Budget strongly recommends they do not.