ITR Economics — December 17, 2024
With TCJA provisions expiring soon, how might Republicans, now in control of the executive and legislative branches, address these tax policy challenges?
Prior to Republicans winning both the executive and legislative branches of government, US tax pundits believed that the debate around the Tax Cuts and Jobs Act of 2017 (TCJA) would dominate conversations in Congress immediately after the inauguration. The recent election results change all that. While the TCJA provisions are still scheduled to expire at the end of 2025 and need to be addressed to avoid a massive tax increase for average Americans, other policy issues will likely take precedence when the new president and Congress take office in January.
Republican control of both chambers of Congress means that reconciliation procedures can be used to address TCJA expiring provisions. One of the main advantages of reconciliation is that it allows legislation to pass the Senate with a simple majority of 51 rather than the 60 votes needed to overcome a filibuster. While specific tax priorities will still be debated, the honeymoon period of a new president and Congress from the same party should accelerate the resolution of TCJA expiring provisions, especially if reconciliation procedures are used.
Last spring, the Congressional Budget Office estimated that extending all TCJA expiring provisions would cost $4.6 trillion. That cost had been seen as a potential obstacle to extending all expiring provisions and enacting other tax cuts.