The Senate's recent move to make the Trump Tax Cuts permanent aims to boost economic growth, reward work, and support families. This development is part of a broader effort to provide tax certainty and stimulate investment .
*What's Behind the Move?*
The Tax Cuts and Jobs Act (TCJA), passed in 2017, introduced significant changes to the US tax code. Key provisions include ²:
- *Corporate Tax Rate*: Reduced from 35% to 21%, with a proposed reduction to 15% for companies manufacturing in the US
- *Pass-Through Income Deduction*: Allows businesses to deduct up to 20% of qualified business income
- *Individual Tax Rates*: Set to revert to pre-TCJA levels, with a maximum rate of 39.6%
*Impact on Taxpayers*
Making the Trump Tax Cuts permanent could:
- *Increase Long-Run GDP*: By 1.1%, offsetting $710 billion of the revenue losses
- *Benefit 62% of Taxpayers*: By reducing federal tax revenue by $3.6 trillion over the next decade
- *Simplify Tax Filing*: By reducing the number of itemizers and increasing the standard deduction
*What's Next?*
The House of Representatives is expected to take up the issue, with Republicans proposing up to $4.5 trillion in tax cuts and at least $1.5 trillion in spending cuts. The outcome will depend on negotiations between lawmakers and the need to offset revenue losses .