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CBO Head: Extending Some Tax Cuts and Jobs Act Provisions Would Cost $4.6 Trillion

S.J. Steinhardt
Published Date:
May 9, 2024

TCJA - GettyImages-897796656

The cost of extending the tax cuts for households, small businesses and the estates of wealthy individuals that were enacted under the Tax Cuts and Jobs Act of 2017 (TCJA), is projected to be $4.6 trillion, Accounting Today reported.

The number comes from new estimates from the Congressional Budget Office (CBO)’s director, Phillip Swagel in an interview with Bloomberg News. Extending the personal income tax cuts will cost $3.8 trillion alone. Other tax cuts set to expire in 2025 include restrictions on the estate tax and valuable write-offs for small business owners.

Swagel said that personal income tax cuts don’t stimulate economic growth as much as the permanent business tax cuts.

Congress will have to consider the deficit impact of renewing the cuts, as the United States faces a "daunting" fiscal outlook, Swagel said. The expiring portion of the tax cuts also includes reductions in individual tax rates and an expansion of the child tax credit. Last year, the CBO estimated that renewing the sunsetting tax cuts would cost $3.5 trillion.

Swagel said that the CBO increased its projection for this year’s budget deficit upward from the $1.6 trillion estimate issued in February, and it is now approaching $2 trillion. The recently enacted $95 billion Ukraine, Israel and Taiwan aid package, an FDIC bank rescue and increased federal student loan forgiveness all are worsening the deficit outlook for the year and decade.

“We know the current situation is not sustainable. But we don’t know when that moment will come, when markets lose faith in the willingness of the United States to take on the deficit,” said Swagel.