Lower Estimate of Revenue from Tax Reforms Excludes Some of the Biggest Ones
The Congressional Budget Office (CBO) and Joint Committee on Taxation (JCT) recently shared a new analysis of the Biden-Harris budget. The CBO-JCT report offers a revenue figure $1.1 trillion lower than the one issued by the administration last spring. However, the CBO-JCT report excluded some of the biggest Biden-Harris revenue raisers from its analysis, which, if added back in, would bring the total in line with the administration’s estimate. The CBO-JCT excluded the administration’s proposed special tax on billionaires (estimated to raise over $500 billion) and fairer taxes on wealthy investors and their inheritors ($289 billion), among other proposals the agencies said lacked sufficient details to score.
“No one should be misled by attention-grabbing headlines about the new CBO-JCT report: the Biden-Harris administration has not only offered an ambitious suite of tax reforms on the rich and corporations, but has supplied realistic estimates of how much revenue those reforms would raise,” said David Kass, executive director of Americans for Tax Fairness. “As we head into next year’s battle over the proposed permanent extension of expiring tax cuts for the rich contained in the 2017 Trump-GOP tax law, we can turn with confidence to the proposed Biden-Harris tax reforms as a fitting substitute–one that demands more from the wealthy rather than giving them more.”
The administration predicted its collection of loophole closures and rate increases, which would only apply to corporations and to households with over $400,000 of income, would raise $4.9 trillion in new revenue over 10 years.
The additional smaller discrepancy between the CBO-JCT score and the administration’s figure is based on the report’s lower revenue predictions from three of the administration’s policies:
- The congressional agencies predict slower economic growth than the administration, which would decrease how much revenue was raised from the proposed Biden-Harris hike in the corporate take rate from 21% to 28%. This is a disagreement on economic forecasting, not the revenue potential of a higher corporate tax rate.
- The agencies expect restored funding for the Internal Revenue Service (IRS) to raise less money from rich and corporate tax cheats than does the Biden-Harris team.
- The agencies believe that raising the tax on corporate stock buybacks will curb share repurchases and thus lower the amount of tax raised over 10 years, even though imposition of the tax in 2023 only temporarily slowed down buybacks, which are now on schedule for yet another record.
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“[The CBO-JCT] does not include all proposals with major budgetary effects contained in the Administration’s budget. As a result, this report does not include projections of total revenues, spending, deficits, and debt under the President’s budget. The proposals not included are estimated by the Administration to increase revenues by $1.0 trillion, on net, over the 2025–2034 period…” –CBO-JCT Analysis, p. 1