The voices of Tax Policy Center's researchers and staff
The Tax Policy Center estimates that the House Ways and Means Committee’s version of the Tax Cut and Jobs Act (TCJA) would increase the ratio of national debt held by the public to Gross Domestic Product (GDP) by 6 percentage points by 2027 and by just over 10 percentage points in 2037 (Table 1) – to 123 percent of GDP
Over the first decade, the legislation increases the deficit by $1.7 trillion assuming it is not offset by spending cuts triggered by statutory PAYGO requirements. About $1.4 trillion would come from reduced receipts (net of outlay effects of tax law changes) and $250 billion from higher interest on the federal debt. Between 2028 and 2037, the TCJA would reduce net receipts by $1.6 trillion and add $920 billion in additional interest costs. Over the entire 20-year period, the combination of reduced revenues and higher interest payments would raise the federal debt held by the public by $4.2 trillion.
TPC based its projections on the Joint Committee on Taxation’s (JCT) revenue estimates for fiscal years 2018-27, TPC’s extrapolation of the JCT estimates for 2028-37, and the baseline economic and budget estimates in the Congressional Budget Office’s (CBO) March, 2017 long-term and June, 2017 updated 10-year budget projections.
CBO projects that, under current law, the federal debt held by the public will increase from 77 percent of GDP in fiscal year 2017 to 91 percent in 2027 and 113 percent in 2037. The House Ways and Means bill would increase the debt to 97 percent in 2027 and 123 percent of GDP in 2037.
Posts and comments are solely the opinion of the author and not that of the Tax Policy Center, Urban Institute, or Brookings Institution.
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