leventhal.bsky.social
Tax geek who can communicate clearly in English. “Tax is law with just enough math to scare away most attorneys.”
Family | cooking | tax & policy | He/Him
40 posts
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48 following
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40 minutes? That cook time just shows this is not the recipe to follow.
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Spicy egg salad? Secret sauce? Yes, please.
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I’m expecting more like Severance: More Questions than Answers.
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deficit increase of extending the TCJA provisions would fit under the budget resolution deficit restrictions. We will see if this prediction is remotely correct when we get the new tax law late in 2025.
14/14
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If the ten-year deficit increase for extending all the provisions were $4T, and the ten-year deficit increase allowed by the budget resolution were $2T, then the five-year (or maybe six-year, depending on the CBO scoring)
13/x
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This is just a creative way to get $4T in tax reduction and ignoring the deficit increase.
All of this leads me to my prediction: the new tax law will extend the TCJA provisions for five years.
12/x
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and thus extending the provisions should not be considered an increase to the deficit for budget purposes, I think that argument is creative but unsound. If the prior bill required provision expiration to meet the prior deficit limits, why should that deficit impact be disregarded now?
11/x
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Could there be some tax rate at which total tax revenue increases? Sure, it’s possible. However, the current rates in the United States don’t fall into that range.
As for the suggestion that current tax law (including TCJA expiring provisions) be considered the baseline,
10/x
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If raising rates would decrease revenue, lowering rates would increase revenue. As a hypothesis, this deserves testing. Over the past fifty years, this and the follow-on idea of “trickle-down” economics have been tested and have not been found.
9/x
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First, tax cuts do not pay for themselves. The Laffer Curve, from the 70s, suggests that there is a relationship between tax rates and total tax revenue which would decrease total revenue if the rates were raised too high, since a high tax rate would discourage marginal income production.
8/x
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There are two arguments I have heard to reduce that number: 1) tax cuts pay for themselves; 2) if we were to measure against the current TCJA environment, extending the TCJA provisions wouldn’t change anything, so we should not count the extension as increased deficit.
7/x
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Current estimates of the ten-year cost for extending the expiring TCJA provisions are about $4T. Different models may produce different results, and the only result that counts is the one from the CBO (which we won’t have until there is a bill to score).
6/x
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I expect the budget resolutions to ask for a $2T deficit over ten years. This is a complete guess on my part. I have no knowledge of any discussions or what the GOP is considering, but I think that number is like what we saw with the TCJA, so it’s reasonable.
5/x
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In 2017, the budget resolutions specified increasing the deficit by no more than $1.5T over ten years. To do that, some of the tax cuts expired after year eight. Another example: some provisions of the ACA had delayed start dates to reduce the overall cost of that bill.
4/x
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Since congress can pass it with a simple majority in both chambers, it avoids the filibuster threshold required for general legislation in the Senate. In exchange, the bill cannot include non-monetary items, and it must meet the target set forth in the budget resolution.
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Why do provisions of the law which went into effect in 2018 expire at the end of 2025?
Whenever congress passes legislation under the reconciliation process, it must meet certain restrictions.
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6.2/6: and maybe more cutting to the corporate rate. I will predict that just like last time, the closer you are to being a commercial real estate developer, the better your tax cut will be.
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6.1/6: The tax code will get more complicated, as the GOP tries to stuff a multi-trillion dollar cut into a much smaller reconciliation package. Since the previous cut was mostly Speaker Ryan’s work, I don’t know what would be in this one other than an extension of the temporary items from the TCJA
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5/6: House republicans won’t have any problems with the debt ceiling. Maybe we can do away with it, once and for all?
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4/6: Trump will be impeached but not convicted. (I figure that’s a safe prediction even if I don’t know what the cause might be, since it happened twice in his first term.) (yes, after the mid-term election)
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3/6: Justice Alito will retire while the GOP has a Senate majority, enabling Trump to pick another name from the Leonard Leo List. I hope it’s a justice more like Barrett and less like James Ho, 5th Circuit (his historical analysis is terrible and partisan).
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2/6: Trump inherits a pretty good economy, but that “goodness” is very unevenly distributed. Nothing in Project 2025 will address that disparity; however, an improving economy will eventually reach everyone. The question: whether the drag from the promised tariffs will cause harm before that happens