By A key U.S. economic agency is projecting that President Donald Trump’s tax policy in his ‘one big, beautiful bill’ will lead to increased take-home pay for American families and higher wages for U.S. workers.
The Council of Economic Advisers (CEA), which advises the White House on economic policy, released a report on Monday morning that said, ‘Taken as a whole, the CEA estimates that the tax cuts in the President’s proposals and the One Big Beautiful Bill will substantially boost investment and GDP relative to if expiring provisions from the [Tax Cuts and Jobs Act] are not extended.’
Congressional Republicans are working to permanently extend Trump’s 2017 Tax Cuts and Jobs Act (TCJA), as well as implement a list of new, shorter-term Trump tax policies, like eliminating penalties on tipped and overtime wages, while granting seniors an added tax deduction.
Republican leaders have warned that failure to extend TCJA could lead to a tax increase of up to 22% for millions of families.
However, extending them could lead to more money in people’s pockets in the long run, the CEA said.
‘For workers and families, the CEA forecasts that wages will be about $6,100 to $11,600 higher, with family take-home pay $7,800 to $13,300 higher because of the increase in wages and reduction in tax obligations,’ the new analysis said.
The CEA said the added deduction for seniors, meanwhile, would increase the average take-home pay for qualifying seniors by approximately $400 to $450 per year.
If passed, the policies would also boost U.S. investment in the long run from 4.9% to 7.5%, according to the projection, and could save or create as many as 4.2 million full-time equivalent jobs in the long run.
It also estimated that Trump’s ‘no tax on tips’ proposal alone would increase tipped workers’ pay by an average $1,675 per year, while eliminating the tax on overtime wages ‘will cause overtime workers to increase their overtime hours by 4.7 percent, leading to a 0.2 percent increase in aggregate labor supply while the provision is in effect.’
‘As a result, the level of GDP increases by 0.1 to 0.2 percent in the short run. The average overtime worker receives a tax cut of between $1,400 and $1,750 per year,’ the projection said.
White House press secretary Karoline Leavitt said during a Monday morning briefing, ‘This bill will give Americans the largest tax cuts in our nation’s history. When Republicans pass the bill, Americans will be keeping more of their hard-earned money and taking home much bigger paychecks.’
‘If Democrats get their way and the Trump tax cuts are not extended, Americans will face the largest tax hike in history to the tune of $4 trillion. Republicans must not side with Democrats in helping them raise taxes,’ Leavitt added.
It comes as Democrats accuse Republicans of trying to gut critical programs like Medicaid and Social Security to secure tax increases for wealthy Americans.
They have pointed to projections like those by the Joint Committee on Taxation, which said people making less than $50,000 per year would get $263 in tax relief, and those making over $1 million would get more than $81,000.
However, Republicans have argued they are focused on aiding the working and middle classes with Trump’s tax bill – while not raising taxes on any Americans.
Rep. Mike Haridopolos, R-Fla., also pointed out last week that the Republicans’ bill does not touch the top income tax bracket.
‘I kept hearing this idea that we’re cutting taxes on the rich,’ Haridopolos said, referring to conversations by his Democratic colleagues on the House floor last week.
‘The current rate is 37%. Under our new proposed bill, it’s still 37%. We’re keeping that rate static, we’re not cutting taxes for the rich. What we need to do, of course, is invest in the people again – the best way you do that is offer tax relief.’
Republicans are working to pass Trump’s policies on tax, immigration, energy, defense, and the national debt all in one massive bill via the budget reconciliation process.
Budget reconciliation lowers the Senate’s threshold for passage from 60 votes to 51, thereby allowing the party in power to skirt the minority – in this case, Democrats – to pass sweeping pieces of legislation, provided they deal with the federal budget, taxation, or the national debt.
House Republicans are hoping to advance Trump’s bill through the House by the end of this week, with a goal of a final bill on the president’s desk by Fourth of July.