Second tax cut package coming this year

The White House is pushing ahead with a second tax cut package. They plan to have a new tax package ready for a vote around September or October.

National Economic Director Larry Kudlow told FOX Business in March that part of the second round of reforms could involve making individual tax cuts, and other provisions, permanent.

The new package could also include measures aimed at helping Americans save for retirement.

It will also try to bring the corporate tax rate from 21% to 20%.

Trump originally wanted to lower the corporate tax rate to 15 percent. Budget rules limited the scope of the tax cuts. Democratic support would be needed to waive those rules.

In April, the CBO (Congressional Budget Office) estimates the budget deficit for 2018 is $242 billion larger than the one that it projected for that year in June 2017. Accounting for most of that difference is a $194 billion reduction in projected revenues, mainly because the 2017 tax act is expected to reduce collections of individual and corporate income taxes.

For the 2018–2027 period, CBO now projects a cumulative deficit that is $1.6 trillion larger than the $10.1 trillion that the agency anticipated in June. Projected revenues are lower by $1.0 trillion, and projected outlays are higher by $0.5 trillion.

CBO estimates that macroeconomic feedback from the tax act—that is, the ways in which the act would affect the budget by changing the overall economy—would subtract a total of $571 billion from primary deficits over the 2018–2028 period. That reduction would mainly result from the act’s boost to taxable income, which would increase revenues. With that macroeconomic feedback incorporated, CBO projects that the act would increase primary deficits by $1.272 trillion through 2028. Incorporating the act’s effects on debt-service costs from changes in federal borrowing and changes in interest rates would push the deficit to an estimated $1.854 trillion over the 2018–2028 period.

Compared with last year’s projections, CBO’s current projections of debt as a share of GDP are higher through 2041 and lower thereafter. CBO now projects that debt measured as a share of GDP would be 3 percentage points lower in 2047 than it projected last year.

At the end of 2007, that debt stood at 35 percent of GDP, but deficits arising from the 2007–2009 recession and the resulting policy responses caused it to grow sharply over the next five years. By the end of 2012, debt as a share of GDP had doubled to 70 percent. Since then, the upward trajectory has generally continued, and debt is projected to reach 78 percent of GDP by the end of this year—a very high amount by historical standards. (For comparison, such debt has averaged 41 percent of GDP over the past 50 years.) During only one other period in U.S. history—from 1944 through 1950, because of the surge in federal spending during World War II—has that debt exceeded 70 percent of GDP.

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