Washington, D.C. — A new issue brief from the Center for American Progress outlines the four likely legislative paths forward that congressional Republicans could take in their budget resolution with regard to tax policy, testing whether they will stand behind their repeated commitments to a “revenue-neutral” approach or choose instead to pursue huge tax cuts for the wealthy and corporations.
“Congress will make some of its most important decisions about tax policy in the budget resolution, before debating the actual tax legislation. If the budget resolution does not require tax reform to be at least revenue-neutral, the result will be a tax cut for the wealthy that leaves everyone else holding the bag in the form of higher budget deficits or cuts to programs such as Medicare and Medicaid,” said
Harry Stein, director of Fiscal Policy at CAP.
Specifically, the reconciliation instructions in the Senate budget resolution, expected to be released this week, will determine whether Congress can use spending cuts or budget deficits—or both—to make these tax cuts. Under reconciliation rules, the Senate will only require a simple majority to pass its tax cuts.
While CAP’s brief calls for revenue-positive tax reform to support Social Security, Medicare, Medicaid, and education, the brief outlines the politically likely paths forward:
1. Revenue-neutral tax reform: This provides no overall tax cut.
2. Deficit-neutral tax cut: Sometimes mislabeled “deficit-neutral tax reform,” this allows lawmakers to cut spending to pay for tax cuts.
3. Deficit-financed tax cut: This allows lawmakers to increase deficits with tax cuts.
4. Tax cut with spending cuts and higher deficits: This allows lawmakers to cut spending and increase deficits to finance even larger tax cuts.
Click here to read “How the Budget Resolution Will Make or Break Revenue-Neutral Tax Reform,” by Harry Stein.
For more information on this topic or to speak with an expert, please contact Devon Kearns at 202.741.6290 or [email protected].