What counts as a tax cut?7xm
That is the question on the minds of many Republicans on Capitol Hill these days as they consider how far — and how fast — they can cut taxes again. The wonky ways of measuring the federal budget are shaping up to be central to the debate.
Forcing the issue is the end of many of the tax cuts Republicans passed in 2017. Without any action by Congress next year, taxes would go up for most Americans, as provisions like lower marginal income rates and a larger standard deduction expired. Republicans want to protect their handiwork and extend the tax cuts before they lapse.
By conventional budget rules in Washington, doing so would amount to a tax cut — and an expensive one at that. Compared with a scenario where all of the 2017 tax cuts end as scheduled, extending them for 10 years would reduce the revenue the government collected by roughly $4 trillion, according to the Congressional Budget Office.
Republicans are struggling to come up with other tax increases or spending cuts to cover that cost. So maybe it is not a surprise that some of them are starting to advance an alternative theory of the case: that continuing existing tax cuts actually costs nothing.
Senator Michael D. Crapo, an Idaho Republican who is expected to lead the Senate Finance Committee next year, took to Fox Business this week to make that argument.
“If you’re just extending current law, we’re not raising taxes or lowering taxes, that is a $4 trillion deficit. That’s ridiculous,” he said in an interview with Larry Kudlow, who helps advise President-elect Donald J. Trump. Mr. Crapo said later, “We’re going to have to take the bold steps of saying to the American people that we are not going to let $4 trillion of tax hikes happen and that it’s not going to increase the deficit.”
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