The American Families and Jobs Act: A Decidedly Mixed
18 October 2023
Since the repeal of these credits is the only revenue raiser in the AFJA, it is unclear how—or if—Congress would offset the tax cuts if a version of the legislation passed in 2023 or 2024. [...] 3795 OctOber 18, 2023 | 8 heritage.org On the other hand, if Congress were to attach the bonus guaranteed deduction to the extension of the Trump tax cuts: l The bonus guaranteed deduction alone would add about $700 billion to the estimated deficit impact of a 10-year extension of the Trump tax cuts after 2025.29 Such a large increase in the estimated deficit impact could be fatal to the prospects. [...] Because the deduction is applied using a midpoint rule, a domestic R&D expenditure may not be fully deducted until the sixth year after the expense is borne: 10 percent of the deduction applies to the first tax year, 20 percent to each of the next four years, then 10 percent in the sixth year. [...] Based on author’s calculation of the IRS’s estimated cost-of-living adjustments to the standard deduction since the passage of the Tax Cuts and Jobs Act in 2017. [...] This estimate is based on the author’s extrapolation of the JCT’s scores of the two-year bonus guaranteed deduction and the accumulation of higher interest payments on the national debt.