NTUF Releases New Study Analyzing the Post-Tax Reform Baseline

$353 billion: that’s the drop in revenue Congress can expect if it were to extend provisions otherwise scheduled to expire in the recently-passed Tax Cuts and Jobs Act (TCJA), according to a new analysis from the National Taxpayers Union Foundation (NTUF). In the newest edition of its paper series called “The Baseline,” which examines legislative scorekeepers like the Congressional Budget Office, NTUF has calculated a “realistic baseline” for expected federal revenue for the next decade. The results find that Congress has an additional $353 billion worth of spending restraint to pursue in the next decade if it wishes to both extend tax relief and prevent additional deficit impact, a task that shouldn’t prove exceptionally difficult given that this amounts to barely more than 0.8 percent of revenue.

The study’s author, NTUF Director of Research Demian Brady, said, “Thanks to arcane Senate rules, several individual income tax provisions in the tax reform are set to expire in 2025. The official estimates provided by the Joint Committee on Taxation and Congressional Budget Office ignore the fact that Congress is virtually guaranteed to extend some or all of those provisions. With a more accurate baseline that recognizes this reality, Congress can take more informed action to restrain spending while considering big ticket items on the agenda this year, like infrastructure and the farm bill. And over a ten-year period, the NTUF current policy baseline and our previous research highlighting waste and inefficiency demonstrates that providing long-term tax relief without adding to the deficit is a feasible goal.”

Following the passage of the TCJA late last year, the Joint Committee on Taxation (JCT) released a baseline that looks only at the law as written, which includes a raft of provisions that expire in 2025. This tax relief is likely to be extended, so JCT’s baseline shows inflated revenue in out years. NTUF has created a more realistic “current policy” baseline that accounts for the likelihood that many of these measures will be extended.

Brady concluded, “While tax reform was a monumental achievement about which it should be proud, Congress must now act to reform its spending habits in order to manage deficits. They can only do so if they have accurate, realistic estimates of revenue like the NTUF current policy baseline we’ve constructed.”

View the study here.
View the interactive chart here.