Extension of Tax Cuts and Jobs Act (TCJA) Could Cut Taxes by $1.1 Trillion According to New Study by
The Trump campaign has yet to release any new indication of whether a new tax code will be passed if President Trump is re-elected. A new report by the Tax Policy Center believes that instead of unveiling a new tax code, Trump could instead simply extend the TCJA through 2030.
According to the report, extending the individual income and estate tax provisions of the TCJA would reduce federal revenues by about $1.1 trillion from 2021 through 2030. Nearly all the reductions would occur after 2025, and the extension would reduce federal revenues by another $3 trillion from 2031 through 2040 (around 0.8 percent of gross domestic product). About 95 percent of the loss would come from lower individual income tax receipts, while the remainder would come from changing the estate and gift exemption amounts.
Retaining some TCJA provisions would cut income taxes while retaining others would raise them. For example, compared to a baseline where all the TCJA tax changes expire, retaining the 2017 law’s lower individual income tax rates would reduce revenue by about $173 billion in 2027. But that would be nearly offset by the $168 billion generated by continuing to eliminate the personal exemption. Increasing the standard deduction would reduce revenue by about $100 billion in 2027, but the revenue loss would be roughly offset by keeping the TCJA changes to itemized deductions, such as the $10,000 annual cap on the deduction for SALT (state and local taxes).
For visual learners, the people at the Tax Policy Center have provided readers with the below useful table. The professionals at The Center for Financial, Legal, and Tax Planning, Inc. are more than knowledgeable with regards to the implications of the TCJA. Please contact us at (618) 997-3436 with any questions.