ASIAN WISCONZINE ONLINE



JUNE 2024 ISSUE



Permanently Extending the Trump Tax Cuts Would Cost $4 Trillion Over the Next Decade



By Bobby Kogan & Jessica Vela



(LEFT): Then-U.S. President Donald Trump speaks about tax reform legislation during a lunch with lawmakers in the Cabinet Room of the White House on December 13, 2017, in Washington, D.C. (Getty/AFP/Saul Loeb)

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This article was published by the center for american progrESS


In December 2017, then-President Donald Trump signed into law legislation that disproportionately cut taxes for wealthy individuals and large profitable corporations—colloquially known as the “Trump tax cuts.” While the corporate provisions of that bill were largely made permanent, the portions that affect individuals were mostly temporary and are set to expire at the end of 2025.



According to new estimates released today by the Congressional Budget Office (CBO), permanently extending the expiring provisions of the Trump tax cuts would cost $4 trillion over the next 10 years, $400 billion per year.* This includes $3.4 trillion from extending the expiring individual and estate tax provisions as well as $551 billion from extending business provisions.



Analysis by the Center for American Progress based on the CBO figures finds that extending the Trump tax cuts would, in 2024 dollars, cost $3.2 trillion over 10 years, $6.8 trillion over 20 years, and $10.3 trillion over 30 years. By 2054, extending the Trump tax cuts would increase the projected debt-to-gross domestic product (GDP) ratio by 36 percentage points, pushing it above 200 percent of GDP. Taken together, the Bush tax cuts, their bipartisan extensions, and the Trump tax cuts would be responsible for more than 100 percent of the increase in the projected debt ratio, with the Trump tax cuts responsible for nearly one-third of the future growth in the debt ratio above 2024 levels.**







An extension would provide, on average, a larger tax cut for extremely rich households than for everyone else. Households with incomes of more than $500,000 per year—roughly the top 2 percent of households by income—would receive a larger tax cut than households making $200,000 per year, not just in dollars terms but also as a percentage of their after-tax income. And the households making $200,000 per year would receive a larger tax cut than those making $50,000 or less per year.



Tax cuts that disproportionately helped the richest Americans are the entire reason debt is rising as a percentage of the economy. Congress should not double down on failed and unfair budget policy. 2025 presents an opportunity for reforms to create a more equitable tax system: Policymakers should raise revenue to ensure the wealthy and corporations pay their share, especially by paring back some of the corporate cuts previously enacted.


The authors would like to thank Jean Ross, Brendan Duke, Madeline Shepherd, and Emily Gee for their helpful suggestions.



* This projection is larger than the CBO’s projection from May 2023 because the budget window has shifted from 2024–2033 to 2025–2034. Extending the Trump tax cuts costs very little in 2024, so shifting the budget window drops a year with almost no cost and adds a year with a large cost. In addition, this projection has estimated that extending the Trump tax cuts would cost more as a percentage of GDP than the estimates from the May 2023 projection.



For the same reason, the projected cost over 2026–2035, which is the 10-year budget window that will be used when the Trump tax cuts are being debated next year, will be significantly larger than the current 10-year projection: CAP estimates that extending the Trump tax cuts would cost roughly $4.4 trillion from 2026 to 2035.



** In other words, if the Trump tax cuts expire on schedule, more than 100 percent of the increase in the debt ratio above its current level over the next 30 years can be attributed to just the Bush tax cuts. If the Trump tax cuts are instead permanently extended, the Bush and Trump tax cuts combined would be responsible for more than 100 percent of the increase in the debt ratio above its current level.