“To sell the tax to the general public as a third bigger than what it is is misleading,” said Rich Prisinzano, the director of policy analysis for the Penn Wharton Budget Model. “Ultimately I’d rather have information close to the information that Congress will have if they decide to move this through the legislative process.”
Republicans faced a revenue crunch in 2017 when they overhauled the tax code. They passed a budget resolution that would allow their tax cuts to lose $1.5 trillion over a decade, but still had to offset some of the rate reductions by finding new sources of revenue.
Republican leaders had to dig through metaphorical couch cushions and symbolically raid their children’s piggy banks to find the tax revenue they needed to pay for their plan.
The overhaul ended up with lots of small tax increases that many people didn’t know about until months afterward, such as taxes on parking benefits for employees at churches and nonprofits, and the death benefits for military widows.
A 2019 year-end spending bill ultimately undid those changes after political pressure mounted, but the result demonstrates that Republicans had to take the risk of angering key constituencies -- churchgoers and military families -- to find enough revenue to pay for their tax cuts.
Democrats would face a similar challenge, if they were to sweep Congress and the White House. They’re keen to raise taxes on the wealthy and corporations -- and their plans largely do that. Biden’s, for example, would raise taxes for those in the top 0.1% by an average of of more than $1 million.
But to fill the gaps between their estimates and what congressional scorekeepers project, lawmakers may have to look to other, potentially less popular, sources of revenue.
Disclaimer: Michael Bloomberg is also seeking the Democratic presidential nomination. He is the founder and majority owner of Bloomberg LP, the parent company of Bloomberg News.
This article was provided by Bloomberg News.