Senate GOP slashes megabill's tax costs with new accounting method

Tax legislation recently unveiled by Senate Republicans only costs $441 billion when tallied using a novel accounting method requested by the GOP.
The new estimate by the Joint Committee on Taxation, which was released late Saturday night, shows how Senate Republicans were able to slash the costs of sweeping tax legislation set to be included in the GOP's sweeping megabill by using a 'current policy baseline' — a never-before-used technique that wipes out the cost of extending existing tax cuts that are set to expire at year's end.
The contrast with the traditional method of fiscal scoring, accounting for tax policy as currently enacted into law, is profound: Similar tax legislation that passed the House in May was estimated by JCT to cost $3.8 trillion under the old method.
In defending the revised baseline, Republicans have argued that extending current tax law shouldn't be counted as adding to the deficit because the GOP is merely preventing huge tax increases on individuals and businesses around the country. But critics have derided the measure, asserting that it threatens to blow up long-standing budget rules and disguises the cost of the GOP's marquee legislation.
'Extending the Trump tax cuts prevents a $4 trillion tax increase — this is not a change in current tax policy or tax revenue,' said Senate Finance Chair Mike Crapo (R-Idaho) in a statement on Sunday morning. 'This score more accurately reflects reality by measuring the effects of tax policy changes relative to the status quo.'
Democrats have requested JCT release a score under the current-law approach. That will 'show the actual cost of the bill,' said Ryan Carey, a spokesperson for Sen. Ron Wyden of Oregon, the top Finance Democrat.
'Republicans rigged this score with deceptive math designed to hide the true, multi-trillion dollar cost of their proposals, and they wouldn't need to do this at all if their bill actually paid for itself,' Carey said.
The new estimate shows the softened math of large tax cuts from those affecting individuals and families to businesses and companies.
Extending basic individual tax rates lowered by Trump's 2017 tax bill, for instance, was estimated by JCT to cost around $2.2 trillion in the House-passed bill. In the Senate bill, under the new baseline, a permanent extension and modification of those rates costs only $83 billion.
Likewise, an expansion of the Child Tax Credit in the House-passed bill would cost around $800 billion. In the Senate bill, JCT estimates that Senate Republicans' version of expansions to the family credit would cost only $124 billion.
In the House bill, a permanent extension of a key deduction for business would cost around $820 billion. Senate Republicans proposal to make the deduction permanent would cost just $6 billion.
Senate Republicans also made deviations to the House Republican plan on a number of the proposed tax cuts. The Senate GOP, for instance, dialed back the cost of President Donald Trump's campaign promises to provide tax relief for tips and overtime work by tens of billions of dollars.
The GOP accounting gambit is expected to face a challenge from Senate Democrats, who will argue that the novel baseline does not comply with budget rules governing the filibuster-skirting reconciliation process. Senate Parliamentarian Elizabeth MacDonough is expected to weigh in on legality of the provisions in the GOP tax bill this week.
But with Republicans intent on passing their megabill on party lines, they have been laying the groundwork to argue they don't need to heed advice from the parliamentarian on the current policy baseline issue and are preparing to potentially override Democrats' objection on the floor with a simple-majority vote.
Fiscal hawks in the House will also likely be watching closely. Under a rule in the House budget set by Rep. Lloyd Smucker (R-Pa.), the amount of tax cuts in the GOP's megabill needs to be offset by a corresponding amount of spending cuts.
Senate Majority Leader John Thune
has already committed to finding at least $1.5 trillion in spending cuts. But if the total cost of Senate Republicans' tax bill exceeds $4 trillion under current-law accounting, House Republicans will insist that any further tax cuts will need to be matched dollar-for-dollar by further spending cuts.

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