Extending TCJA tax cuts would modestly boost economy, but not enough to pay for itself. Tax Policy Center estimates that extending the expiring provisions of the 2017 Tax Cuts and Jobs Act would increase gross domestic product by 0.4 percent in the short term. However, over time, rising federal deficits would reduce business investment, limiting the overall economic benefits. The additional growth would only offset about 6 percent of the more than $4 trillion cost of extending the TCJA provisions permanently between 2025-34.
President Trump meets with Republicans as tax and spending debates continue. US News reports that President Donald Trump met with congressional Republicans at the White House to discuss deregulation, and spending reductions. The meeting comes as House and Senate Republicans debate the details of Trump’s plan; Politico has details on how the tax portion of the plan is getting bigger. Senate Budget Committee Chair Lindsey Graham (R-SC) is pushing for a $300 billion bill focused on border security and defense, while House conservatives want at least $2.5 trillion in spending cuts. Speaker Mike Johnson (R-LA) needs near-total unity among House Republicans to pass any legislation.
GOP lawmakers struggle to unite on tax and spending plan. CNBC reports that while House Republicans are still facing internal gridlock over the size of tax cuts and spending reductions, House Budget Chair Jodey Arrington (R-TX) believes a deal is close. Some GOP lawmakers favor reducing the duration of the tax cuts to lower their cost, while others insist any tax cut package be deficit-neutral.
IRS workers could be blocked from taking buyouts until after tax season. The Associated Press reports that IRS employees will not be able to accept buyouts from the Trump administration’s federal workforce reduction plan until after May 15. The delay, shared in communication with IRS staff Wednesday, applies to key tax season positions. The IRS expects more than 140 million tax returns to be filed by the April 15 deadline. However, a federal judge has paused the buyout deadline for all government employees until after a hearing Monday, Feb. 10. A group of unions representing federal workers this week sued the federal Office of Personnel Management over the program questioning its legality.
Bankers lobby to keep municipal bonds tax-free. Bloomberg reports that public finance bankers are lobbying Congress to protect the tax-exempt status of municipal bonds. The House Republicans’ tax cut discussions have included eliminating the federal subsidy for municipal debt, which bankers argue would significantly raise borrowing costs for state and local governments. Lobbying efforts are ramping up as lawmakers search for ways to offset the cost of extending the 2017 tax cuts.
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