GOP Tax Plan Faces Deficit Hurdle at $5 Trillion Cost
House Republicans’ partial tax plan would cost nearly $5 trillion according to a new estimate from Congress’s nonpartisan tax scorekeeper, significantly exceeding the parameters set in their own budget resolution and complicating their path forward.
The Joint Committee on Taxation’s projection, released Saturday evening, reveals that the preliminary plan’s cost “far exceeds what is permitted by the budget resolution Republicans adopted earlier this year,” according to Politico.
Budget Constraints Challenge Implementation
The House Republican-approved budget allows for $4.5 trillion in tax cuts, contingent on the GOP identifying $2 trillion in spending cuts. This preliminary assessment suggests lawmakers will need to make substantial adjustments to stay within their own fiscal guidelines.
“The deficit impact of the bill is well above the Ways & Means allowable increase of $4.0 to $4.5 trillion, so lawmakers will either need to make adjustments, include offsets, or both,” wrote the Committee for a Responsible Federal Budget in a Saturday evening analysis cited by Yahoo News.
Key Components of the Partial Plan
The partial text released by the House Ways and Means Committee Friday evening would make permanent the individual income tax rates established in the 2017 Tax Cuts and Jobs Act, which are otherwise due to expire at the end of the year.
Additionally, the plan would increase the child tax credit from $1,000 to $2,500 through 2028, and to $2,000 thereafter, while adding a requirement for recipients to have a Social Security number, according to Reuters.
Missing Provisions and Contentious Issues
The preliminary version notably omits several of President Trump’s campaign promises, including his proposal to eliminate taxes on tips, as well as provisions addressing the $10,000 deduction limit for state and local taxes—a priority for Republicans from high-tax states like New York, California, and New Jersey.
Speaker Mike Johnson had previously indicated that House Republicans were looking at a more modest $4 trillion tax plan paired with $1.5 trillion in spending cuts, suggesting ongoing deliberations about the appropriate scope of the legislation.
Economic Impact and Expert Analysis
Economic experts continue to debate the impact of extending the 2017 tax cuts. The Tax Foundation estimated that extending these provisions “would decrease federal tax revenue by $4.5 trillion from 2025 through 2034,” with long-run GDP rising by 1.1 percent, offsetting only about 16 percent of revenue losses.
Critics argue that the tax plan disproportionately benefits high-income earners while adding significantly to the national debt. The Center on Budget and Policy Priorities labeled the approach as “doubling down on the flaws in the 2017 law” that would inevitably lead to cuts to programs like Medicaid and SNAP.
Next Steps in the Legislative Process
Ways and Means Committee Chairman Jason Smith has scheduled a meeting to debate and advance the legislation on Tuesday afternoon, with Republicans expected to release the full text of the tax bill on Monday.
The proposal represents just one component of the massive package of tax cuts, energy policy, and border security investments the party aims to pass in the coming weeks through the budget reconciliation process.
