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Treasury projects $1.8T in new revenue over 10 years from Senate tax bill

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According to Market Intelligence, December 2022

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Treasury projects $1.8T in new revenue over 10 years from Senate tax bill

The Treasury Department's analysis of the Senate's version of the Tax Cuts and Jobs Act, which cites Trump administration estimates of 2.9% real GDP growth over 10 years included in its 2018 budget, projects an increase in tax revenues of $1.8 trillion during a 10-year window.

"Adding this $1.8 trillion of incremental revenue to the static current law score of -$1.5 trillion results in total receipts over the 10-year window increasing by $300 billion," the memo reads. "These increased receipts are primarily collected in the last five years, as full expensing creates growth in early years but results in a deferral of collection of taxes."

A Joint Committee on Taxation analysis of the version of the Tax Cuts and Jobs Act debated in the Senate Finance Committee predicted that GDP would increase by 0.8% over a 10-year budget window while adding an additional $1 trillion to the U.S. fiscal deficit.

"[JCT] estimated $408 billion of additional tax revenue. Adding this $408 billion to the static score leads to a change in total projected receipts under JCT's assumptions of approximately -$1 trillion on a current law basis," the Treasury memo reads. "OTP compared this 2.9% GDP growth scenario to a baseline of previous projections of 2.2% GDP growth. Treasury expects approximately half of this 0.7% increase in growth to come from changes to corporate taxation."

The department's memo noted that neither JCT nor Treasury released a plan showing increased tax receipts under the House plan, but Treasury "would not expect the results to be materially different."

A House-Senate conference committee is scheduled to meet publicly on Dec. 13 as it begins the process of merging the differing versions of the tax reform packages passed by both chambers.