- Jan 7, 2003
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What would make America great again, paying off the national debt or giving workers and corporations tax cuts? During the last campaign season, there was a lot of talk from Magadonians on the important debt crisis we are constantly facing with many saying it was the most important issue. We know that the last Trumpian tax cut added some one to two trillion dollars.
American Progress.org (link)
Tax Policy Center.org (link)
American Progress.org (link)
Tax Cuts Are Primarily Responsible for the Increasing Debt Ratio
A series of massive, permanent tax cuts have created large federal budget primary shortfalls and continue to exert upward pressure on the debt ratio. In other words, the current fiscal gap—the growing debt as a percentage of the economy—stems from legislation that cut taxes, disproportionately for the very rich. While it is true that the Great Recession and legislation to fight it, along with the costs of responding to the health and economic effects of COVID-19, pushed the level of debt higher, these costs were temporary and did not change the trajectory of the debt ratio. If Congress wants to decrease deficits, it should look first toward reversing tax cuts that largely benefited the wealthy, which were responsible for the United States’ current fiscal outlook.
Tax Policy Center.org (link)
Expiring provisions
To satisfy budget process requirements, lawmakers decided to sunset some provisions of the TCJA. Most cuts to individual income taxes, for example, expire at the end of 2025. Business expensing for new investment is also temporary. As conventionally scored, the act thus increased deficits from 2018 through 2026 and decreased them thereafter. If lawmakers decide to extend all the expiring provisions, however, that will add about $480 billion to deficits through 2027 and a growing amount thereafter.
...If TCJA’s expiring provisions are eventually made permanent, however, deficits will be persistently higher.