AAF: Flawed CBO Revenue Estimates Should Not Set Terms For TCJA Reauthorization

Flawed CBO Revenue Estimates Should Not Set Terms For TCJA Reauthorization

TOPLINE: The Congressional Budget Office (CBO)’s projections for the Tax Cuts and Jobs Act of 2017 (TCJA) have undercounted TCJA’s revenue generation by $1.5T so far and could end up being wrong by $3.2T or more when all is said and done. Rather than allow unreliable estimates to upend or delay much-needed tax reform, Congress should move forward immediately to make as many of TCJA’s provisions permanent and protect the American people from a major tax hike from going into effect at the end of 2025. CBO Was Wrong About the Trump-Pence Tax Cuts: • Prior to the passage of TCJA in 2017, CBO estimated that the bill would increase

the deficit by $1.455T over the next 10 years and reduce revenues by $1.649T. • Months later in April 2018, CBO estimated that TCJA would increase the deficit by

about $1.9T over 10 years. Both estimates were wrong. • Federal revenue continued to grow despite CBO projecting a massive increase in

the deficit, and actual revenue and current projections continue to exceed CBO’s estimates from before TCJA was passed. Actual revenue from 2018 to 2024 has already outpaced CBO’s inflation-adjusted projections after TCJA was enacted by $1.498 T. Analyzing Current Projections Up To 2027 Shows an Even Starker Contrast: • 2018 to 2027, actual revenue and current projections:

o In total, they exceed CBO’s post-TCJA projections by $3.214T. o Individual income tax revenue exceeds CBO’s post-TCJA projections by

$2.04T. o Corporate income tax revenue exceeds CBO’s post-TCJA projections by

$240B. o They exceed CBO’s projections from 2017 without any tax cuts by $2.177T. Flawed CBO Estimates Jeopardize the Future of Tax Cuts for Hardworking American Families: • Despite CBO’s wildly inaccurate projections, TCJA is proven to have driven more

economic activity and increased tax revenue collections, even with lower rates. • Seven years after its passage, however, individual tax rates and small business

relief are set to expire at the end of 2025 because of congressional rules that limit the use of budget reconciliation to provide tax relief if the resulting deficit impact is more than the amount outlined in reconciliation or occurs outside of the ten-year budget window.

For more information, please contact AAF Policy Director John Shelton at jshelton@advancingamericanfreedom.com

In Billions of Dollars Revenue Number Source & Year 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Total

3,531 3,687 3,853 4,011 4,178 4,361 4,545 4,742 4,948 5,158 43,016

3,338 3,490 3,678 3,827 4,012 4,228 4,444 4,663 5,002 5,299 41,979

3,330 3,463 3,421 4,047 4,897 4,439 4,918 5,163 5,580 5,935 45,193

Individual Income Taxes (TCJA)

In Billions of Dollars Revenue Number Source & Year 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Total

1,724 1,833 1,933 2,036 2,136 2,246 2,355 2,469 2,588 2,713 22,032

1,639 1,744 1,833 1,900 1,990 2,092 2,199 2,316 2,574 2,804 21,091

1,684 1,718 1,609 2,044 2,632 2,176 2,426 2,621 2,968 3,253 23,131

Corporate Income Taxes (TCJA)

In Billions of Dollars

Revenue Number Source & Year 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Total

324 344 380 383 389 395 405 416 428 443 3,907

243 276 307 327 353 388 421 447 449 431 3,642

205 230 212 372 425 420 530 524 495 469 3,882

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