Trump tax cut extensions are becoming increasingly expensive: analysis

Estimates for the cost of extending Trump's tax cuts have risen every year, and it's not clear exactly why, according to an analysis by the Committee for a Responsible Federal Budget (CRFB), a Washington think tank.

According to current projections from the Joint Tax Committee and the Congressional Budget Office, extending the expiring provisions in former President Trump's tax cuts will cost more than $4 trillion by 2028. That's up from about $3 trillion when the law was passed, representing an increase of roughly 33 percent, more than what would be expected based on the growth of the economy and inflation alone. the report argues.

“While inflation and economic growth explain some of the difference, the cost of tax cuts as a percentage of GDP has increased by about 30 percent. (0.3 percentage points) since 2018,” budget researchers said.

The reason for the deficit increase is not immediately clear, but the CRFB said it could be due to tax avoidance by one of the revenue boosters in the 2017 law, as well as abuse of the Trump pass-through deduction.

“Higher investments in equipment and tax avoidance efforts [state and local tax] cap solutions and abuse of the 20 percent pass-through deduction clearly played a role,” the researchers wrote.

Pass-through entities are businesses structured as partnerships and S corporations that allow owners to claim their income on their personal tax returns, as opposed to filing specific corporate returns.

Last year, the IRS created a brand new division in its major corporate and international divisions to track uncollected taxes from pass-throughs and complex partnerships, given the influx of pass-through filings and an earlier decline in the number corporate audits.

“The increased compliance efforts will focus on adding more attention to high-income, high-net-worth individuals, partnerships and large corporations that have seen sharp declines in audit rates over the past decade,” the IRS said in a statement last year declaration. .

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