It will cost 50% more than expected to extend the 2017 tax law, which was the most important thing that Donald Trump’s administration did. This is because wealthy taxpayers have found loopholes that let them pay much less in taxes.
That’s what a report released Thursday by the nonpartisan Committee for a Responsible Budget, which wants to save money, says.
It would cost the Treasury Department $4 trillion over 10 years to extend the Trump tax cuts. This is up from $286 billion in 2018, and it continues a trend where the costs of the tax cuts rise every year.
The report says that it’s not entirely clear what caused these higher costs, but it’s clear that “tax avoidance efforts involving SALT cap workarounds and abuse of the 20 percent pass-through deduction played a role.”
Rich people in states with high taxes have been getting around the limit on state and local tax deductions by saying that the taxes they pay are business costs.
To make the SALT tax cap less of a problem, some states passed laws that let people pay their income tax through their small businesses.
Kristen Parillo of Tax Notes wrote in a recent article, “The regimes essentially move the SALT deduction from the individual level, where it is subject to the cap, to the entity level, where it can likely be deducted in full.”
