email: rrstaub@gmail.com
Details of the Conference Report for the Tax Cuts and Jobs Act
On Friday, House and Senate conferees signed off on a conference report resolving the differences between the versions of the Tax Cuts and Jobs Act that passed each chamber. Votes are expected in the House and Senate early next week. The 503-page conference report hews more closely to the language of the Senate than the House version, but it also reflects a range of compromises, fixes, and negotiated agreements that reflect the concerns and priorities of members in both chambers.
Even—perhaps especially—those who have followed every twist and turn of the tax reform debate can easily lose track of which provisions are in or out. Throughout the process, we have outlined the details of both the House and Senate versions, and tracked their amendments. Now that we have final language, it makes sense to start with a clean slate, looking at the provisions of the conference committee report against a current law baseline.
Here, then, are the major provisions of the conference committee report. All figures (both current law and conference report provisions) are for 2018. Most individual income tax changes will revert to current law after 2025 unless extended.
Provision
|
Current Law
|
Conference Report
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Individual Income Tax Rates and Brackets
|
Seven-bracket progressive rate income tax with a top marginal rate of 39.6 percent.
|
Retains seven brackets, but at reduced rates, including a top marginal rate of 37 percent. Provisions sunset at end of 2025.
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Indexing Provisions
|
Individual income tax provisions indexed to the Traditional CPI measure of inflation.
|
Individual income tax provisions indexed to the Chained CPI measure of inflation.
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Standard Deduction
|
Standard deduction of $6,500 for single filers, $9,550 for heads of household, and $13,000 for joint filers. The current code also offers a $4,150 per-person standard deduction along with an additional standard deduction of $1,300 for the aged or blind ($1,600 if unmarried).
|
Increases the standard deduction to $12,000 for single filers, $18,000 for heads of household, and $24,000 for joint filers, while eliminating the additional standard deduction and the personal exemption. Provisions sunset at the end of 2025.
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Above the Line Deductions
|
Provides a range of above-the-line deductions which can be claimed regardless of whether a filer itemizes.
|
Repeals the moving expense deduction (except for active duty military personnel) and eliminates the alimony deduction effective 2019 (though those receiving alimony no longer count it as income). Retains other above-the-line deductions, including educator expenses and student loan interest. Graduate student tuition waivers also remain in place.
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Itemized Deductions
|
Offers a list of itemized deductions, claimable in place of the standard deduction. The mortgage interest deduction is currently limited to $1 million in mortgage debt and $100,000 in equity debt.
|
Retains the charitable contribution deduction. Also retains the mortgage interest deduction for acquisition, but limited (for new purchases) to $750,000 in mortgage debt, while eliminating the deduction for equity debt. Caps the state and local tax deduction at $10,000 (property plus choice of income or sales taxes, as under current law), except for taxes paid or accrued in carrying on a trade or business. The medical expense deduction threshold is lowered to 7.5 percent for 2018, and reverts to 10 percent thereafter. Eliminates other itemized deductions.
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Child and Family Tax Credits
|
Partially refundable $1,000 child tax credit for the first two children, with a less generous Additional Child Credit for third and subsequent children.
|
Increases the child tax credit to $2,000. Of this, $1,400 would be refundable, with the refundable portion indexed to inflation. All dependents ineligible for the child tax credit are eligible for a new $500 per-person family tax credit. Provisions begin to phase out at $400,000 ($200,000 for single filers). Social Security Numbers required for portions of the above. All provisions sunset at the end of 2025.
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Alternative Minimum Tax
|
Imposes a two-rate alternative minimum tax (AMT) with an $86,200 exemption and a $164,100 exemption phaseout for joint filers. (Other exemptions and phaseout thresholds exist for single filers and married filing separately.) Under the AMT, the standard deduction, personal exemption, and state and local tax deduction are disallowed (among others), the mortgage interest deduction is limited to first and second residences, and certain other deductions (including the medical expense deduction) are limited.
|
Increases the exemption to $109,400 and raises the phaseout threshold to $1 million for joint filers. (Other exemptions and phaseout thresholds exist for single filers and married filing separately, and are also adjusted.)
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
529 Deduction
|
Allows a deduction for deposits into a 529 account for college tuition and expenses.
|
Expands the use of 529 accounts to cover tuition for students in K-12 private schools and homeschooling costs.
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Taxes
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Provision
|
Current Law
|
Conference Report
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Corporate Tax Rate
|
Multi-bracket corporate income tax structure with a top marginal rate of 35 percent and a bubble rate of 39 percent.
|
Single-rate 21 percent corporate income tax.
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Treatment of Pass-Through Income
|
Subject to individual income tax rates and brackets.
|
Adopts a 20 percent deduction for pass-through income, limited to the greater of (a) 50 percent of wage income or (b) 25 percent of wage income plus 2.5 percent of the cost of tangible depreciable property for qualifying businesses, including publicly traded partnerships but not including certain service providers. Limitations (both caps and exclusions) do not apply for those with incomes below $315,000 (joint), and phase out over a $100,000 range.
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Capital Investment
|
In relevant part, allows 50 percent bonus depreciation of short-lived capital investment, such as machinery and equipment, through 2020, and offers Section 179 small business expensing with a cap of $500,000 and a phaseout beginning at $2 million.
|
Allows full (100 percent) expensing of short-lived capital investment, such as machinery and equipment, for five years, then phases out the provision over the subsequent five, and raises Section 179 small business expensing cap to $1 million with a phaseout starting at $2.5 million.
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Alternative Minimum Tax
|
Applies a 20 percent tax rate to a more broadly defined alternative definition of income.
|
Corporate AMT is repealed.
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tax Treatment of Interest
|
Allows a full deduction for interest paid (with no cap).
|
Caps net interest deduction at 30 percent of earnings before interest, taxes, depreciation, and amortization (EBITDA) for four years, and 30 percent of earnings before interest and taxes (EBIT) thereafter.
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Operating Loss (NOL) Provisions
|
Generally, net operating losses can be carried back two years or forward twenty years, with no limits with regard to taxable income.
|
Eliminates net operating loss carrybacks while providing indefinite net operating loss carryforwards, limited to 80 percent of taxable income.
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash Accounting
|
Businesses with less than $5 million in income may elect to use the cash method of accounting.
|
Increases eligibility to businesses with up to $25 million in income.
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Credits and Deductions
|
Provides a range of business credits and deductions.
|
Modifies, but does not eliminate, the rehabilitation credit and the orphan drug credit, while limiting the deduction for FDIC premiums. Amortizes the Research & Experimentation Credit after 2021.
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
International Income
|
Imposes a worldwide system of taxation.
|
Moves to a territorial system with anti-abuse rules and a base erosion anti-abuse tax (BEAT) at a standard rate of 5 percent of modified taxable income over an amount equal to regular tax liability for the first year, then 10 percent through 2025 and 12.5 percent thereafter, with higher rates for banks.
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deemed Repatriation
|
Not applicable.
|
Enacts deemed repatriation of currently deferred foreign profits at a rate of 15.5 percent for liquid assets and 8.0 percent for illiquid assets.
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Taxes
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Provision
|
Current Law
|
Conference Report
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Estate Tax
|
$5.6 million estate tax exemption, adjusted annually for inflation.
|
Doubles the estate tax exemption in 2018 (would continue to be adjusted for inflation, now C-CPI).
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Individual Mandate Penalty
|
Imposes a penalty of $695 or 2.5 percent of income (with a deduction), whichever is higher, to those who forgo health insurance.
|
Reduces the individual mandate penalty to $0 in 2019, effec
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Who Gets A Tax Cut Under The Tax Cuts And Jobs Act?
Each sample taxpayer has realistic characteristics to show how the individual income tax provisions of the bill would impact individuals and families across the income spectrum. Our results indicate a reduction in tax liability for every scenario we estimated, with some of the largest changes in after-tax income accruing to moderate-income families with children.
The Winners And Losers In The GOP Tax Act
Winners
— Many people who work for a living, including the richest. The bill would cut individual tax rates and double the standard deduction to $12,000 for single people and around $24,000 for couples. That would mean a tax break for most Americans, at least in the next few years. Late in the game, GOP leaders cut the top rate for households making over $600,000 and individuals making over $500,000 to 37 percent (from the current 39.6 percent).
— Wealthy heirs. The estate tax threshold would get doubled to about $11 million for individuals and $22 million for married couples. Those whose inheritances would exceed those exemption levels would still get hit, since the plan wouldn't end the estate tax as the House wanted, but there aren’t too many of them.
— Businesses. The top corporate rate would move down to 21 percent from 35 percent, and shareholders and others with investment income would see their tax bills cut by one-third or more. Owners of businesses that are taxed at the same rates as individuals, from the corner grocery to the Trump Organization, would see their effective tax rate drop to less than 30 percent, at most, from as high as nearly 40 percent.
— Big U.S. companies that operate globally, like Apple and Microsoft. The United States would follow most other industrialized countries in switching to a "territorial" tax system, where overseas profits aren't taxed at home. They'd also get a low, one-time tax rate when they bring home profits they're holding abroad. However, that tax would be larger than expected, and they would face complex rules meant to discourage them from moving more money and operations abroad.
— Wall Street. Investment fund managers wouldn’t have to reclassify their "carried interest" compensation — the share of investor profits that they get — from lower-taxed capital gains to ordinary income. Despite President Donald Trump's vow to end what some consider a loophole, the only new limit fund managers would face is the amount of time they have to hold assets to qualify for the lower rate — three years instead of one year under current law.
— People with high medical expenses and adopted children. Taxpayers would be able to deduct the costs of medical expenses that exceed 7.5 percent of their adjusted gross income for this tax year and next. In 2019, the threshold would return to 10 percent, its current level. House Republicans had proposed fully scrapping the deduction. A credit for adoptions also remains on the books, a provision that the House had also targeted for elimination.
— College students and K-12 teachers. College loan interest would remain deductible, and tuition waivers for graduate students wouldn’t get counted as taxable income. Both had been on the chopping block. But an excise tax on large college endowments is expected to remain in the tax package, which opponents are saying could hurt college scholarships going forward. For lower levels of education, teachers would still be able to deduct some of their out-of-pocket expenses for school supplies they buy their students.
— Local governments, hospitals and housing. The legislation would preserve the tax-deductible status of private activity bonds. They are used by state and local governments for infrastructure, by hospitals that want to expand and for building affordable housing.
— Manufacturers. Major manufacturers would benefit the most from a provision that would let businesses immediately write off the cost of new investments, known as full expensing. It would be on the books for five years before beginning to wind down under the bill, but backers expect it to get extended.
— GOP brass: Trump, House Speaker Paul Ryan and Senate Majority Leader Mitch McConnell are finally checking a legislative-victory box as the bill speeds across the finish line with seemingly minimal resistance. They spent months trying to repeal the Affordable Care Act but couldn’t do it, and now they’re on the verge of eliminating a big part of it — the requirement for everyone to have health insurance — in the tax bill. Expect them to tell voters ahead of next year’s midterm elections that the tax cuts are growing the economy and everyone wins. But ...
Losers
— People who make a lot of money and live in high-tax states like New York, New Jersey and California. No one would more acutely feel the loss of the federal deduction for all state and local taxes and the new $750,000 cap on the home mortgage interest deduction, down from $1 million. A compromise on SALT would allow taxpayers to deduct property taxes and either income or sales taxes, with a combined limit of $10,000. But some lawmakers, particularly from the Northeast, still say it's not enough for many of their constituents. Bottom line: The amount of their income that is taxable would increase.
— Doctors and lawyers. Some pass-through businesses, including doctors and lawyers, would be precluded from the lower tax rates on pass-through income.
— Corporate borrowers. Business debt wouldn’t get the same tax benefits going forward because companies' ability to deduct interest would change. The House and Senate bills would place a new limit on the business deduction to 30 percent of income, though the two chambers defined income differently.
— Workers who depend on a regular paycheck. Many of them would get a mostly minimal decrease in their marginal tax rate, compared to contractors and the self employed. This is due to the changes in taxation of pass-throughs, and some tax experts say people would try to game the system to take advantage of the pass-through deduction.
— Deficit hawks. The tax plan was built with a $1.5 trillion budget allowance for tax cuts that didn’t require offsets, which advocates have said would mostly be made up by revenue from economic growth. But a host of official estimates and outside analyses have shown otherwise, and there’s certainly concern that the real cost of the package would exceed that $1.5 trillion when individual tax cuts that are scheduled to run for only eight years get extended as expected.
— Preachers who want to politic from the pulpit. The long-standing ban on churches and other religious organizations endorsing political candidates would continue, despite an attempt by the House to use the tax bill to repeal it. Many evangelical Christian groups have been lobbying for years to get rid of the prohibition, and Trump had vowed earlier this year to "totally destroy" it. But the Senate parliamentarian ruled the repeal doesn’t meet the chamber’s rules, and so it was jettisoned.
- The tax bill cuts income tax rates, doubles the standard deduction, and eliminates personal exemptions.
- The final tax bill keeps the seven income tax brackets but lowers tax rates
- The bill eliminates most itemized deductions. That includes moving expenses, except for members of the military.
- It also includes deductions for people making alimony payments for agreements signed after 2018.
- It keeps deductions for charitable contributions, property taxes, mortgage interest, and retirement savings.
- It limits the deduction on mortgage interest to the first $750,000 of the loan. Current mortgage-holders aren't affected.
- Taxpayers can deduct up to $10,000 in state and local taxes. They must choose between property and income or sales taxes.
- The bill expands the deduction for medical expenses for 2017 and 2018. It allows taxpayers to deduct medical expenses that are 7.5 percent or more of income.
- It doubles the standard deduction for everyone. A single filer's deduction increases from $6,350 to $12,000. The deduction for Married and Joint Filers increases from $12,700 to $24,000.
- The bill repeals the Obamacare tax on those without health insurance.
- It eliminates personal exemptions. Taxpayers can currently subtract $4,150 from income for each person claimed on the tax return.
- The bill doubles the estate tax exemption to $11.2 million for singles and $22.4 million for couples.
- It keeps the Alternative Minimum Tax. Increases the exemption from $54,300 to $70,300 for singles and from $84,500 to $109,400 for joint.
- It keeps the deduction for student loan interest.
- The final bill increases the Child Tax Credit from $1,000 to $2,000. Credit is refundable up to $1,400.
- The final bill allows parents to use 529 savings plans for tuition at private and religious K-12 schools. They can also use the funds for certain educational expenses for home-schooled students.
- It allows a $500 credit for each non-child dependent. The credit helps pay families for caring for elderly parents.
- The final tax bill lowers the maximum corporate tax rate from 35 percent to 21 percent, the lowest since 1939.
- It raises the standard deduction to 20 percent for pass-through businesses. The deductions are limited once the income reaches $157,500 for singles and $315,000 for joint. Pass-through businesses include sole proprietorships, partnerships, limited liability companies, and S corporations. They also include real estate companies, hedge funds, and private equity funds.
- The bill limits corporations' ability to deduct interest expense to 30 percent of income excluding depreciation.
- It allows businesses to deduct the cost of depreciable assets in one year instead of amortizing them over several years. It does not apply to structures.
- The final bill eliminates the corporate AMT.
- It retains tax credits for electric vehicles and wind farms.
An online tool that can estimate one's tax savings under the GOP Tax Reform Plan.
Tax Bill's "Pass Through" Rule
Pass-through businesses’ profits “pass through” their books directly to owners, unlike corporations, which parcel out profits through dividends to stockholders.
Under existing law, pass-through owners pay the individual income tax rate on those profits, not the corporate rate. Under the Republican bill, the corporate rate would be slashed to 21 percent, while the top individual income tax rate, which some pass-through business owners pay, would be 37 percent.
To address the disparity, Republicans included tax relief for pass-through owners in their bill, allowing them to deduct 20 percent of their pass-through business income.
Republicans put in anti-abuse measures to ensure owners of bona fide business operations claim the 20 percent deduction and prevent high earners from seeking to recategorize their income as pass-through income to take advantage of the deduction.
Republicans also capped the income eligible for the full 20-percent deduction at $315,000 for married couples and $157,500 for individuals. But they included a “capital element” in the formula for determining eligibility beyond those thresholds, presenting a lucrative tax break for some, including wealthy owners of commercial property, said tax experts.
“This seems ideally suited for commercial property businesses, where there aren’t a lot of workers, but there is a lot of valuable property around,” said Steven Rosenthal, senior fellow at the nonpartisan Tax Policy Center, a think tank.
Income above the pass-through caps can be eligible for the 20-percent deduction based on a formula: 50 percent of employee wages paid; or 25 percent of wages plus 2.5 percent of the value of qualified property at purchase, whichever is greater.
“The idea is to use the sum of the ‘2.5 percent rule’ plus 25 percent of wages ... to get the full 20-percent deduction” on more income, said New York University School of Law Professor Daniel Shaviro, a tax law specialist, in an email.
An assessment of the Republican bill by 13 tax experts, mostly academics, said the formula would “expand the ability of highly paid owners in certain industries – and particularly those heavy in property but light in employees, like real estate – to qualify for the pass-through deduction.”
4 Of The Biggest Myths About The Tax Cuts And Jobs Act
1. Tax Reform Only Helps the Rich
Perhaps the most widely repeated claim is that the Tax Cuts and Jobs Act is designed to help the wealthiest few Americans, while leaving the rest of us stuck with the bill. Nothing could be further from the truth. The Tax Cuts and Jobs Act cuts rates for nearly all seven brackets, for both singles and couples, and roughly doubles the standard deduction.
The new standard deduction will be $12,000 for individuals and $24,000 for couples. Combined, these provisions ensure the overwhelming majority of lower- and middle-income filers will get a tax break. Most lower-income people won’t be required to pay any taxes.
Further, the Tax Cuts and Jobs Act greatly improves the tax code for lower- and middle-income families with children by increasing the child tax credit from $1,000 per child to $2,000 per child. It also makes $1,400 of the tax credit refundable, which means many of those working adults with kids who don’t pay any income tax will receive as much as $1,400 per child from other taxpayers when they file their taxes, reducing the other taxes they pay (like payroll taxes).
Anyone claiming the Tax Cuts and Jobs Act only helps rich people also ignores that cutting corporate taxes and taxes imposed on small business owners creates jobs and improves economic growth. The Tax Foundation estimates tax reform will raise wages and create 339,000 additional full-time equivalent jobs. Most of these jobs are not for the uber-wealthy, but lower- and middle-income earners. Additionally, if the tax reform provisions are made permanent (because the bill was passed using budget reconciliation, some provisions expire in a decade), the Tax Foundation claims 1.6 million additional full-time jobs will be created because of the business-friendly tax cuts in this legislation.
2. Sick People Will Pay More in Taxes
The House of Representatives’ original bill eliminated a deduction that exists under current tax law and allows people to deduct out-of-pocket medical expenses incurred that surpass 10 percent of their adjusted gross income (AGI). Senate Republicans refused to agree to that provision, but that hasn’t stopped many on the Left from continuing to demonize Republicans for allegedly trying to inflict financial pain on families facing costly illnesses.
This myth is particularly absurd, because not only did the Senate refuse to eliminate the deduction, the final version of the Tax Cuts and Jobs Act passed by the House and Senate actually lowers the threshold at which people can claim the deduction, down to 7.5 percent of income. This means under Republicans’ legislation, people will be able to deduct even more of their medical expenses.
For instance, under current law, a family with an AGI of $50,000 can’t start deducting medical expenses until costs surpass $5,000. Under the Republican legislation, they could start deducting medical expenses at $3,751.
3. The Tax Cuts and Jobs Act Kills Obamacare
Some have suggested Republicans are using tax reform to accomplish what they couldn’t just a few months ago: eliminating Obamacare. The Affordable Care Act (ACA) is an atrocious train wreck, and I would love if this tax bill managed to end Obamacare as well as cut taxes.
Unfortunately, it doesn’t do that. The Tax Cuts and Jobs Act does, however, effectively eliminate in 2019 the penalty on people who don’t purchase “qualifying” health insurance plans. Currently, the Obamacare penalty is either 2.5 percent of household income (up to the total yearly premium for the average price of a Bronze plan) or $695 per adult plus $347.50 per child under 18 (up to $2,085), whichever is higher.
Some have said eliminating the penalty effectively ends Obamacare. They reason, based on some highly speculative estimates by the Congressional Budget Office (CBO) and others, that if people aren’t forced to buy an Obamacare plan, millions of healthy people won’t. Instead, they’ll either go without health insurance or purchase a cheaper, non-Obamacare-compliant health care insurance plan outside of an ACA exchange.
If millions of people do this, it will drive the cost of insurance up for the people left in the exchanges, most of whom (under this theory, anyway) will be sicker people. This will cause Obamacare to enter a death spiral, destroying the ACA.
There are at least two extremely problematic issues with this prediction. For starters, no one has any clue how many people will leave the Obamacare exchanges. CBO believes 13 million people will choose not to purchase insurance by 2027, but there’s literally no way to calculate this accurately. It’s just a guess—and not a very good one, either.
Further, if 13 million people do leave the exchanges, it would say a lot about just how terrible Obamacare is. No one wants sicker people to pay higher rates, but is forcing millions of people to continue to buy insurance they don’t want really the best way forward? Of course not!
Second, Obamacare is already collapsing under its own weight. Health insurers have been exiting the Obamacare exchanges as quickly as possible. According to the Centers for Medicare and Medicaid Services, 1,565 counties have only one health insurance carrier (51.43 percent of all counties) in their Obamacare exchange. Even worse, some states, such as Arizona, Iowa, and Kentucky, only have one carrier available statewide. Overall, nearly 30 percent of all Obamacare exchange participants have just one option. The Kaiser Family Foundation reports in 2014 just 6 percent of ACA participants had one choice.
If Obamacare collapses, it won’t be because of this tax reform legislation, it will be because it’s been collapsing since it went into effect. Anyone who says Obamacare would be sustainable without the Tax Cuts and Jobs Act is simply lying. With or without tax reform, Obamacare is dying and needs to be replaced.
4. Tax Cuts Will Increase the National Debt by $1.5 Trillion
Generally speaking, lower tax rates generate less tax revenue for the federal government. Some tax reform opponents say the Tax Cuts and Jobs Act will cost about $1.5 trillion in lost revenue, a staggering figure, especially for those of us who believe our ever-skyrocketing debt is dangerous to our nation’s long-term fiscal health and stability.
This figure, however, assumes the tax cuts will generate no economic growth. The Tax Foundation reports that when expected economic growth and expansion are included into its economic projections, the cost will actually be much closer to $448 billion over a decade, or about $44.8 billion per year. By comparison, the Obama administration spent about $1.2 trillion on its stimulus programs, most of which was spent between 2010 and 2012.
If you’re anything like me, even the modest $44.8 billion per year cost is too much to stomach. America is already in a debt crisis, so adding to it shouldn’t be an acceptable path. Yet Republicans have pledged to cut government spending next year, and $44.8 billion is only a fraction of the federal government’s massive budget. The $44.8 billion could be offset simply by eliminating government waste, leaving room for Congress to address the drivers of our national debt, namely social entitlement programs such as Medicare and Social Security.
Citizens Against Government Waste (CAGW) identified in its 2017 analysis 607 recommendations that would save taxpayers $336.2 billion in the first year alone. Sen. James Lankford (R-OK) claims in his 2017 report on federal waste that government wastes or spends inefficiently more than $400 billion. Even if only a small portion of the CAGW/Lankford waste could be identified and cut, Republicans’ tax plan could be paid for without a single meaningful government program being slashed. Then Congress could focus on addressing the true sources of our debt problem, which isn’t tax cuts but exorbitant spending.
Updated December 21, 2017
