The American Families and Jobs Act: A Decidedly Mixed
Coherent Identifier 20.500.12592/2hw9pg

The American Families and Jobs Act: A Decidedly Mixed

18 October 2023

Summary

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.

Pages
16
Published in
United States of America