Latest news with #JointCommitteeonTaxation
Mint
3 hours ago
- Business
- Mint
Senate Republicans Advance Trump Tax Bill on Crucial Test Vote
President Donald Trump's $4.5 trillion tax cut bill prevailed in a crucial Senate test vote, a sign that Republican leaders are resolving the infighting over portions of the legislation and moving toward meeting a July 4 deadline the president has set for passage. Senate Majority Leader John Thune and his lieutenants may still need to tweak portions of Trump's signature economic legislation in order to win the 50 votes it needs to pass the Senate. But the Senate voted Saturday to begin debate on the legislation just hours after party leaders unveiled the latest version of the massive tax and spending package. The measure advanced by a 51 to 49 vote, with just two Republicans voting to stall consideration. Democrats are now planning to demand a full reading of the bill text, which could push a final vote into Monday. The bill includes nearly $4.5 trillion worth of tax cuts, according to the non-partisan Joint Committee on Taxation. But Republicans are aiming for only $693 billion of those tax reductions to count in the official bill cost — assuming they are able to successfully use a budget gimmick that wouldn't count the extension of Trump's first-term cuts in the price tag. Despite broad Republican support for the tax cuts and spending increases for immigration enforcement and defense at the core of the package, party leaders have struggled to balance competing demands from the GOP's discordant ideological factions. Conservatives are demanding larger spending cuts to offset the tax cuts. Moderates are worried about the scale of proposed cuts to safety-net programs such as Medicaid and food stamps. And some senators from states with significant renewable energy industries are trying to soften the rapid phase-out of green energy tax credits. Thune and other party leaders also have been trying to resolve lesser skirmishes such as one on a provision to block states from regulating artificial intelligence. A new draft of the bill unveiled early Saturday morning attempted to win over moderates on the Medicaid issue and conservatives on renewable energy. The latest version accelerated a phaseout of wind, solar and electric vehicle tax credits to win over conservatives. Senate Republicans moved up a cut-off of tax credits used for wind and solar projects even earlier then they initially proposed, amid pushback from Trump on the credits. The measure would require those projects to be 'placed in service' by the end of 2027 to receive the incentives, as opposed to simply being under construction by that time. The new Senate legislation also would end a popular $7,500 consumer tax credit for electric vehicles earlier than in the prior drafts. While the initial proposal would have ended the incentive at the end of 2025 for most EV sales, the new version would terminate the credit after Sept. 30, 2025. Tax credits for the purchase of used and commercial electric vehicles would end at the same time. To win over moderate Republicans, the bill would create a new $25 billion rural hospital fund aimed at helping mitigate the impact of Medicaid cuts, which otherwise could force some rural providers to shut down. Republican Senator Susan Collins of Maine had demanded a $100 billion fund. Moderate Republicans also won a delay from 2031 to 2032 on the full impact of a new 3.5% cap on state Medicaid provider taxes. States often use these taxes, within some already existing rules, to draw down federal funding and increase payments to facilities like hospitals. Limits on the Medicaid funding mechanism would begin phasing in in 2028. A tentative deal with House Republicans to increase the state and local tax deduction is included in the new version. The bill would raise the SALT deduction cap from $10,000 to $40,000 for five years before snapping back to the $10,000 level. The new cap applies to 2025 and rises 1% in subsequent years. The ability to claim the full SALT amount would phase out for those making more than $500,000 per year. A House attempt to curb the ability of pass-though businesses to circumvent the SALT cap was removed from the text. The Senate measure would make permanent individual and business tax breaks enacted in 2017, while adding temporary new breaks for tipped and overtime workers, seniors and car buyers. It also would avert a possible August payment default by raising the US debt ceiling by $5 trillion. Senate Republican leaders are seeking to pass the bill as soon as Sunday, giving the House time to vote on it by July 3. This article was generated from an automated news agency feed without modifications to text.
Boston Globe
17 hours ago
- Business
- Boston Globe
Senate Republicans ready vote on tax bill, still awaiting its final cost
Get Starting Point A guide through the most important stories of the morning, delivered Monday through Friday. Enter Email Sign Up Republican Senator John Kennedy spoke with reporters after departing a Senate Republicans luncheon on Friday. There is still no final fiscal breakdown, known as a score, from either the nonpartisan Congressional Budget Office or the Joint Committee on Taxation on the latest version of Trump's spending package. Kent Nishimura/NYT Advertisement Many of the changes reflect deals cut with individual Republicans who were at risk of voting against the bill and other, more mechanical rewrites to their cuts on Medicaid, energy tax credits and food stamps. Those updates will allow Republicans to try to advance the bill using a fast-track budget process in the Senate without any Democratic support. The revisions, taken together, could add or subtract to the overall costs of the package, but Republicans may not know precisely by how much when they hold their first vote this weekend. There is still no final fiscal breakdown, known as a score, from either the nonpartisan Congressional Budget Office or the Joint Committee on Taxation, which advises lawmakers on the budget implication of their legislative agenda. Advertisement Only the joint committee has rendered a partial verdict, having studied just the tax components in the Senate's earlier, unrevised proposal. Computed in the traditional way, analysts found it would cost $4.2 trillion over the next decade. Otherwise, the two congressional budget watchdogs have not been able to offer more comprehensive projections about the sprawling bill, or the effects of their proposal on the broader economy. Studying the House version of the so-called One Big Beautiful Bill Act, which passed in late May, they determined it would add more than $3 trillion to the debt within the next decade, even after accounting for potential economic growth. Economists across the political spectrum have come to similar conclusions about the package and its price, drawing sharp rebukes from Trump and his aides. The White House continues to insist that the bill will supercharge economic growth, and when combined with the president's other policies, generate as much as $11 trillion in deficit reduction. Senator Josh Hawley talked to reporters at the Capitol on Saturday. After releasing a 940-page version of their sprawling domestic policy bill overnight, Senate Republicans were trying to find enough votes to pass it. TIERNEY L. CROSS/NYT Nor have congressional analysts determined the ways in which the Senate's new vision would affect families' finances across different income brackets. Earlier reports about the House tax legislation projected that the bill would fall hardest on the poor, who would see cuts to federal aid, while reserving the greatest financial benefits for the rich. For now, the best estimates for the Senate legislation are either outdated or preliminary, though they suggest the version winding through the chamber may carry a similar fiscal burden or turn out to be even more expensive. In one analysis, released earlier this week, the Committee for a Responsible Federal Budget projected that the Senate proposal could add as much as $4.2 trillion to the debt by 2034, after accounting for expected changes to the bill. Marc Goldwein, the senior vice president of the deficit-reduction group, acknowledged the true cost was unclear because 'we don't have a score.' Advertisement The cost could rise because of the specific changes Republicans made overnight, some experts said. The revised measure now provisions $25 billion for rural hospitals affected by Republicans' proposed cuts to Medicaid, for example, as well as an increase in the cap on the state and local tax deduction demanded by lawmakers in the House. Senate majority leader John Thune with reporters as he returned to his office from the floor of the Senate on Friday. Kent Nishimura/NYT Martha Gimbel, a founder of the Budget Lab at Yale, pointed to those additions as she predicted that 'everything is moving in a more expensive direction.' But that, she added, is the problem. 'None of us have had time to sit down and figure this out,' she said. On Saturday, with some fiscal hawks in the Senate refusing to vote to open debate on the domestic policy bill until they receive an official tally of its costs, and Democrats signaling they plan to force a line-by-line reading of all 940 pages to protest it, it looked unlikely the Senate would begin voting on the substance of the legislation until Sunday at the earliest. This article originally appeared in .
Yahoo
3 days ago
- Business
- Yahoo
How a GOP accounting maneuver hides $3.8 trillion in red ink from Trump's 'big, beautiful bill'
As Senate Republicans barrel toward votes in the coming days on President Trump's Big Beautiful Bill, they are using a controversial budget maneuver to hide $3.8 trillion in red ink. This Senate-preferred accounting approach is known as using a "current policy baseline" and takes the stance that extending current tax rates should be counted as having zero cost even if they are set to expire. What doesn't change is the underlying fact that those changes are projected to add trillions to the national debt if they become law. The approach is being derided as an "egregious budget gimmick" and upends decades of accounting practices with trillions in economic consequences. This bit of Washington arcana was front and center this week after the Joint Committee on Taxation analyzed the tax provisions in the bill using this "current policy" approach and found a total cost of about $442 billion in the coming decade. But after economists untangled the math — and put things into the more comprehensive "current law" framework — the true impact on the national debt was shown to be nearly 10 times higher at about $4.2 trillion. The focus comes as GOP senators struggle to overcome internal disagreements on the price tag as well as other provisions in the coming days. Senate Majority Leader John Thune is pushing for first votes on the package to start on Friday but acknowledged to reporters Thursday that he may "have to adjust the timing and schedule a little bit" after a series of new complications emerged and compromise on other issues has so far remained elusive. As for the price tag, Republicans leaders have tried with mixed success to end debate on that question by citing the "current policy" total and saying it is more realistic. "Extending the Trump tax cuts prevents a $4 trillion tax increase — this is not a change in current tax policy or tax revenue," Senate Finance Committee Chair Mike Crapo said in a recent statement. "This score more accurately reflects reality by measuring the effects of tax policy changes relative to the status quo." But the maneuver has been pilloried by economists. The Committee for a Responsible Federal Budget this week called the approach "an egregious budget gimmick" that could have the larger effect of allowing trillions in new government borrowing in the years ahead. Andrew Lautz of the Bipartisan Policy Center has detailed how the method changed the score on a range of key tax issues in the bill. In one case, the "current policy" approach says Senate provisions to extend tax rates for individuals will cost about $83 billion over the coming decade. The full cost to the national debt, meanwhile, is projected to be over $2.2 trillion. Likewise, on plans to extend a higher standard deduction, the price tag moves from $165 billion to $1.3 trillion under the different frameworks. In an interview, Lautz added that many of the new additions to the tax code that are counted fully under "current policy" — notably Trump's campaign promises — are temporary and that eventually extending them could drive up the underlying costs further. "We see that happening with no tax on tips, overtime, a whole bunch of temporary provisions in both the House and the Senate," he noted, saying it is reasonable to interpret that as "an effort to drive down the on-paper cost of the bill" but with Congress likely to extend them down the road if they prove popular. Such a future extension could cost zero under the "current policy approach, a possibility that has worried economists since Senate Republicans began to signal this as their approach earlier this year. "If this becomes the norm, then you could see both parties abuse it," said Erica York of the Tax Foundation, noting how Joe Biden could have leaned on this idea for a range of his priorities. From her perspective — as someone worried about debt — she added, "It's not a good development." Ben Werschkul is a Washington correspondent for Yahoo Finance. Click here for political news related to business and money policies that will shape tomorrow's stock prices Sign in to access your portfolio
Yahoo
5 days ago
- Business
- Yahoo
Republican Move to Mask $3.8 Trillion Tax-Cut Cost Rings Alarms
(Bloomberg) -- Senate Republicans are aiming to wipe away some $3.8 trillion of federal budget red ink from the GOP's signature tax-and-spending bill with an unprecedented parliamentary maneuver, stoking concerns about long-term US fiscal policy. Bezos Wedding Draws Protests, Soul-Searching Over Tourism in Venice US State Budget Wounds Intensify From Trump, DOGE Policy Shifts Commuters Are Caught in Johannesburg's Taxi Feuds as Transit Lags US Renters Face Storm of Rising Costs Republicans are using a fast-track legislative process known as reconciliation, which will allow them to make President Donald Trump's 2017 income-tax cuts permanent without Democratic support. The cost of such legislation has long been measured by comparing it to what would otherwise happen to the federal budget under the current law. Senate Republicans want to start with a different assumption: that the current policy remains in place indefinitely. In that case, extending the 2017 tax cuts beyond 2025 wouldn't add anything to federal deficits — because they're simply maintaining the status quo. The Joint Committee on Taxation tallied a $3.8 trillion hit to deficits from keeping the 2017 rates in place another decade. If successful, the maneuver would upend decades of precedent by sweeping away rules aimed at making it harder for legislators to do permanent damage to fiscal balances. Economists warn it would set a dangerous precedent for future legislation, by allowing the majority party to enact what appears to be a temporary measure and then later setting it in stone without an official cost. 'It immediately undercuts a lot of the benefit of reconciliation from the perspective of folks who are worried about deficit-finance changes,' said Garrett Watson, director of policy analysis at the Tax Foundation, a policy think tank. 'That's why there are those limitations that are currently put in place.' Borrowing Burden Watson said making the 2017 tax cuts permanent would slightly increase long-run economic growth, but that would not offset the cost and 'doesn't come close to solving the debt problem.' A preliminary analysis from the Tax Foundation found the Senate bill would cost $3.9 trillion over a decade, after accounting for economic impacts. The latest estimate from the nonpartisan Congressional Budget Office showed the House-passed version of the bill would add, in total, $2.8 trillion to deficits over a decade. The Senate is seeking to pass its version this week, though the date may slip. The Joint Committee on Taxation scored that chamber's tax portion of the bill as adding $441 billion to deficits over a decade if using the GOP assumption that extending the 2017 reductions is costless. Even leaving current deficits in place, the US is already heading for a record debt-to-gross domestic product ratio in coming years. A parliamentary shift that reduces the legislative barrier to increased borrowing threatens to worsen the trajectory, and erode investor confidence in longer-term US Treasuries. 'The key principle in budget accounting is all costs need to be counted at some point,' said Brendan Duke, senior director for federal fiscal policy at the Center on Budget and Policy Priorities, a left-leaning think tank. The move would 'ensure that the cost of the tax cuts for 2026, 2027, 2028, 2029 and so on never gets counted.' The Senate official with the job of deciding what's allowed in the reconciliation bill, Parliamentarian Elizabeth MacDonough, hasn't yet made clear whether the 'current policy baseline' is in line with budget rules. But she previously said it could be used in the budget-resolution outline the passed the Senate earlier this year. 'Spending Problem' Republicans argue that taxes aren't the cause of US deficits, which amount to a 'spending problem.' The GOP chair of the tax-writing Senate Finance Committee, Mike Crapo, said in a June 22 statement, 'Extending the Trump tax cuts prevents a $4 trillion tax increase — this is not a change in current tax policy or tax revenue.' There are still provisions in underlying reconciliation legislation — such as a ban against raising deficits after 10 years — that Democrats argue require the use of a 'current law' baseline. The Senate tax cuts are likely to violate that rule, analysts say. The Senate draft includes much of the House-passed provisions, with a few changes. The Senate version makes permanent three business tax breaks, pares back breaks for workers and includes deeper cuts to Medicaid. The cap for federal deductions for state and local taxes is also expected to be pared back from the $40,000 limit set in the House bill. The move could set a precedent to reap additional tax-cut benefits in the future. The Senate bill limits tax breaks on tipped wages and overtime pay to four years in order to keep down the bill's price tag. Under a current policy baseline, Congress could extend those levy reductions indefinitely for no cost in the future. Marc Goldwein, senior policy director at the Committee for a Responsible Federal Budget, a centrist fiscal watchdog group, raised concerns about handing Congress a way to easily enact tax cuts without reckoning with the true cost. 'All of a sudden, the door is open to a lot of other very expensive policies,' Goldwein said. While Republicans might feel good for now as they push the bill, 'they haven't fully thought about what's going to happen when the shoe's on the other foot' and Democrats are in the majority, he said. --With assistance from Erik Wasson. 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Politico
5 days ago
- Business
- Politico
Mike Johnson urges Republicans to stay in town for megabill vote
Senate Republicans' tax package would cost $4.2 trillion, according to a new estimate that will likely create additional complications for Republicans as they race to get their megabill to President Donald Trump's desk. That's already more than the $4 trillion that House Republicans say they're willing to spend on tax cuts, and it doesn't include the cost of a hoped-for deal to loosen a controversial cap on state and local tax deductions that would likely cost hundreds of billions of dollars more. It's unclear whether the House will be willing to swallow the higher price tag. The estimate also comes as Senate Republicans are scrambling to salvage a number of provisions meant to offset some of the cost of the legislation after they were rejected by the Senate parliamentarian. Though Republicans have been debating their tax, immigration and defense bill for months, lawmakers in the two chambers have not yet settled on how much they can spend in total on the legislation — an impasse set to soon come to a head. And, confusingly, the estimate is the second official analysis of the legislation in recent days — and is radically different from the first. At the insistence of Republicans, the official Joint Committee on Taxation also estimated the cost of the legislation using an alternative methodology that showed the plan only costing $442 billion. Critics call that 'current policy baseline' analysis a budget gimmick that's designed to hide the true cost of the legislation. Democrats demanded the second estimate using the conventional methodology forecasters use to project the cost of legislation. 'Republicans claim their plan costs only $440 billion, but this new analysis shows it actually costs 10 times that much,' said Senate Minority Leader Chuck Schumer and Sen. Ron Wyden (D-Ore) in a joint statement. 'The Republicans want to rig the process and flout the rules.' The dueling analyses only cover the tax portion of the package. The other parts will be analyzed by JCT's sister agency, the Congressional Budget Office. Amid mounting concern over federal red ink, House Republicans have been adamant that lawmakers spend no more than $4 trillion on tax cuts unless they can simultaneously come up with more than $1.5 trillion in spending cuts.
