There Are Plenty of Offsets for Tax Cut Extensions

As Congress considers extensions of the expiring provisions in the Tax Cuts and Jobs Act (TCJA), lawmakers will need to come up with $3.9 to $4.8 trillion or more of offsets to prevent any extension from adding to the nation’s growing debt. Luckily, there are several sources of offsets for them to consider – eliminating the need for any deficit-increasing reconciliation instructions.

The Committee for a Responsible Federal Budget identified $700 billion of offsets ranging from limiting executive spending authority, reducing health care spending, cutting other mandatory spending, increasing user fees and asset sales, improving tax compliance, and raising other forms of revenue. Our Build Your Own Tax Extensions tool also features trillions of dollars of options, the ability to customize income tax rates, and specific changes to TCJA provisions that can reduce their revenue loss. Over the coming weeks and months, we will continue to publish trillions of dollars of additional offsets, which will be available here.

In addition to CRFB offsets, there are even more offsets available from others:

• President Trump’s campaign proposals, which included $3.7 trillion of savings.
• President Trump’s FY 2021 budget, which includes $4.6 trillion of total primary savings, $1.8 trillion of which comes from specific mandatory and revenue policies.
• The House Budget Committee’s FY 2025 budget, which includes $8.4 trillion of total primary savings, $6.0 trillion of which comes from mandatory spending cuts.
• The Republican Study Committee’s FY 2025 budget, which includes $13.1 trillion of total primary spending cuts, $9.8 trillion of which come from mandatory spending cuts.
• The Center for Renewing America’s FY 2023 budget, which includes $10.1 trillion of total primary spending cuts, $6.1 trillion of which come from mandatory spending cuts.
• The Congressional Budget Office’s Budget Options database, which will be updated in December 2024, and the Joint Committee on Taxation’s list of about $2 trillion of annual tax expenditures, which could be repealed, reformed, or limited.
• The Tax Foundation’s Options for Reforming America’s Tax Code 2.0, which has around 40 tax options that can be used to offset TCJA extension.
• The President’s FY 2025 budget, which includes mandatory spending cuts and revenue increases totaling $5.6 trillion.
• CRFB’s Fiscal Blueprint, which identifies a path to stabilize the debt over a decade.

While extending the expiring provisions in the TCJA will require substantial savings, doing so is not impossible and would prevent the possibility of the national debt growing further than it is already projected to grow over the next decade. With $85 trillion of projected federal spending and over $20 trillion of tax expenditures over the next decade, there are plenty of places to cut.