The tax cuts that were enacted under the first Trump administration ended in the end of 2025. President Trump and his Republican colleagues are eager to extend them, but doing so without discounts in simultaneous spending would raise a deficit of more than 5 trillion dollars until 2035.
How can politicians pay for the expansion of tax cuts for 2017? diverse sources He suggested that the new administration is studying wide discounts for spending programs, including Medicaid program and additional nutrition assistance program, also known as Snap or Food Stamps. This single punch will leave almost all low-income families-in addition to many medium and high-income families-worse.
Worse, the distribution of the extended cuts will be Retreat. Only 1.7 % of the benefits will go to 20 % of families by income, compared to approximately 65 % to the top five -year -old and more than 23 % to the top of only 1 %. The average tax savings of the lower five will be $ 130 a year, compared to $ 70,000 annually to 1 %. The highest 0.1 % will enjoy more than 0.1 % of an average annual tax savings for more than $ 275,000.
Estimates from the tax policy center in urban areas Microscopic stimulation form Clarify these effects. If the extension of the tax cuts is extended by reducing federal assistance equally across the families, then more than three quarters of families will be worse. At the bottom of two income, more than 99 % of families will be worse, and face an average annual tax increase of $ 1515. Even in the middle of the middle, 76 % of families will be worse.
And if spending reduces the target safety network programs such as those that the administration aspires – contrary to spending discounts in general – the poor families will be harmed more. Even if the spending discounts are suitable for family income, 63 % of families will be worse.
Supporters of tax cuts often argue that they are strengthening economic growth and helping everyone through the income spectrum. However, a conversation Congress budget office analysis I found that extension of expired income tax provisions will not only produce a small short -term stumbling block in GDP. After only four years, by increasing the federal budget deficit, the cuts will lead to somewhat minimum GDP growth, if they were allowed to end.
At the same time, several recently Analyzes Of decades of politics in the wealthy countries of the Organization for Economic Cooperation and Development, I found that the reduction of taxes for the wealthy has no meaningful impact on economic growth. But it exacerbates the income inequality.
We have now Wide evidence Investing in children’s health, education, nutrition and other resources pays long -term profits, both for people who are directly affected and the economy in general. This indicates that Congress must allow tax cuts to end and instead invest in programs that serve children and families with low and medium income. The renewal of the 2017 tax cuts and their financing with spending cuts is only the correct policy if the “problem” is that the poor are not the poor enough and that the rich are not rich enough.
William Jill is the co -director of the Tarabi Policy Center in Urban Brookings and was the great economist of the President of the Economic Advisers at President George E.