Posted on 11/19/2021 9:21:18 AM PST by PhxRising
The Congressional Budget Office on Thursday released its “official” cost estimates for the House tax and entitlement bill, but don’t believe it. The CBO gnomes aren’t lying about a 10-year deficit estimate of $367 billion. They’re obliged to score the bill under rules that Democrats have rigged with multiple tricks that disguise the real cost by trillions of dollars.
Democrats phase out the biggest programs in the bill while paying for them with 10 years of tax increases. They phase-in other programs and off-load costs to the states. The Penn Wharton Budget Model estimates the House bill would cost nearly $4.6 trillion over 10 years if temporary provisions are made permanent, as most will be.
The Committee for a Responsible Federal Budget (CRFB) pegs the cost at $4.9 trillion if temporary tax credits and programs are made permanent through 2031. This would add $1.5 trillion to deficits over the next five years without additional tax offsets. Let’s take a tour of this budget deception.
(Excerpt) Read more at wsj.com ...
They may get help from Republicans, who won’t want to be attacked for raising taxes on families. CRFB says making the allowances permanent would cost $1.13 trillion. Based on current law, it would cost $1.5 trillion since the $2,000 tax credit from the 2017 GOP tax reform is set to drop back to $1,000 after 2025. So that’s nearly $1.4 trillion in hidden costs alone.
• Earned income tax credit expansion. The bill nearly triples the maximum EITC value for childless adults—but only for one year. Its $15 billion annual cost would be $135 billion if extended over the decade. The kicker: Individuals can qualify based on their previous year’s earnings, so they technically don’t have to work to get it.
• ObamaCare premium subsidies. Democrats in March extended eligibility to Americans making more than 400% of the poverty line and capped their premium payments for benchmark plans at 8.5% of income. Subsidies for lower earners were also increased so people making 150% of the poverty line don’t have to pay a penny toward their premiums, compared to 4.1% before the change.
These sweetened subsidies are set to expire after next year, but the bill extends them through 2025 while also allowing lower-income adults in states that opted out of the ObamaCare Medicaid expansion to qualify. CRFB says these subsidies will cost $530 billion if they are made permanent.
• A new child-care entitlement. Households making up to 250% of their state’s median income would qualify for child-care vouchers, and their payments would be capped at 7% of income—less for lower earners. The bill appropriates about $100 billion through 2024 to states and “such sums as may be necessary” from 2025 to 2027.
Spending on this entitlement like all others can be expected to increase on autopilot, especially as providers raise prices to capture more subsidies. States will have to pick up 5% of the cost from 2025 to 2027, which somewhat reduces federal spending but could lead to state tax hikes down the road.
• Universal pre-K. The bill appropriates about $18 billion to states for universal pre-K through 2024 and then “such sums as may be necessary” through 2027. States would be on the hook for about 5% of the cost starting in 2025 and 37% in 2027.
The pre-K and child care entitlements are estimated to cost only $380 billion because they phase in gradually and expire after six years. But there’s zero chance they will expire in 2027. Once the middle-class gets hooked, the entitlements will be impossible to repeal. CRFB estimates the two programs would cost $800 billion if made permanent.
• The current $10,000 limit on the state-and-local tax (SALT) deduction increases to $80,000 through 2030. In 2031 it would return to $10,000. Penn Wharton says this gimmick would lead to $65 billion in additional tax revenue through 2031 though it would cost about $300 billion through 2025. Confused?
Under current law, the $10,000 SALT cap is set to expire in 2025 with most of the 2017 GOP tax cuts. So raising the cap to $80,000 would add to the deficit through 2025 but subtract from it through 2031. This gimmick will make it harder to extend the other expiring provisions of the 2017 tax reform, such as bonus depreciation for business. CRFB says that if the 2017 tax reforms are extended separately, any savings on paper would be erased and replaced with an additional $340 billion in costs.
*** In sum, the House bill will cost $2 trillion to $3 trillion more than CBO is estimating because Democrats have camouflaged the costs. Penn Wharton estimates the bill’s tax increases and other revenue will yield about $1.8 trillion, but this doesn’t account for how the tax hikes will change the incentives to work and invest.
Keep in mind that CBO this summer projected that annual deficits will already exceed $1 trillion on average through 2030, causing U.S. debt to swell by $12.8 trillion—and that’s before the infrastructure bill or this House bill. When the spending all kicks in, and the rich are all taxed out, the middle class will be hit with a huge tax increase. This is the most dishonest spending bill in American history.
study
This might be great in helping some ‘IF’ there were no penalties for hard working people, i.e. taxes, which come in many hidden forms.
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