CRFB Applauds Administration Call To Fully Offset Tax Reform
For Immediate Release
Yesterday, the Trump Administration released its first full budget (summarized here). Among other policies, the budget called for comprehensive tax reform but estimated no revenue loss from such reform – and indeed, it projected higher revenue as a result of the assumed growth effects from tax reform and other proposals.
Although during the past month the Administration has said tax reform would be paid for in part with economic growth, with regards to the budget a White House official told the Wall Street Journal that the budget “assumes the tax plan will cover its costs with other strategies [besides growth], such as limiting tax deductions and closing loopholes.”
Maya MacGuineas, president of the Committee for a Responsible Federal Budget, said the following:
If the White House now supports tax reform that is fully paid for by closing deductions and loopholes, we welcome this new development. Comprehensive tax reform is desperately needed, and if done right it can provide an important boost to economic growth.
Tax reform that is deficit-neutral on a conventional basis can even improve our nation’s fiscal situation by helping to grow the economy and revenue base.
That the budget assumes revenue neutrality before accounting for economic growth is a testament to just how hard it is to control our national debt while also cutting taxes. Even with current revenue levels, significant spending reductions and reforms are needed.
As Congress and the President work to develop the details of tax reform, they should stick with the President’s new target of revenue neutrality before growth, dedicating any growth impact from tax reform toward bringing down our post-war era record-high national debt.
To do so, policymakers must work to identify specific tax expenditure reforms and other necessary offsets.
Tax reform that reduces the debt is far more likely to spur sustained economic growth than unaffordable tax cuts.
For more information contact Patrick Newton, Press Secretary, at email@example.com.