President Donald Trump and Republicans have a big math problem with their attempt to overhaul the nation's tax code.
According to analysis of the tax-reform framework released Wednesday by Trump and the "Big Six" tax negotiators, decreased tax rates in the plan would reduce the amount of revenue the federal government takes in by an estimated $5.8 trillion over 10 years.
If various personal deductions were eliminated as the plan proposes, it could still leave a $2.2 trillion addition to the deficit over 10 years, according to the analysis from the Committee for a Responsible Federal Budget.
That could be a problem for Republicans, whose soon-to-be-released budget calls for the tax plan to add only $1.5 trillion to the federal deficit.
So to pass the tax plan using budget reconciliation, which allows the GOP to avoid a Democratic filibuster in the Senate, the plan has to fit in that $1.5 trillion hole.
"The Big Six 6 tax release was big on cuts and short on specific 'pay fors,'" a note from Morgan Stanley said. "Some estimates of today's plan indicate that there are about $5 trillion in proposed cuts that Republicans need to fit into a $1.5 trillion box (the amount of 10-year deficits agreed to in a tentative deal in the Senate Budget Committee."
That means the plan released Wednesday will most likely have to change substantially to make the math work, analysts say.
According to analysis of the tax-reform framework released Wednesday by Trump and the "Big Six" tax negotiators, decreased tax rates in the plan would reduce the amount of revenue the federal government takes in by an estimated $5.8 trillion over 10 years.
If various personal deductions were eliminated as the plan proposes, it could still leave a $2.2 trillion addition to the deficit over 10 years, according to the analysis from the Committee for a Responsible Federal Budget.
That could be a problem for Republicans, whose soon-to-be-released budget calls for the tax plan to add only $1.5 trillion to the federal deficit.
So to pass the tax plan using budget reconciliation, which allows the GOP to avoid a Democratic filibuster in the Senate, the plan has to fit in that $1.5 trillion hole.
"The Big Six 6 tax release was big on cuts and short on specific 'pay fors,'" a note from Morgan Stanley said. "Some estimates of today's plan indicate that there are about $5 trillion in proposed cuts that Republicans need to fit into a $1.5 trillion box (the amount of 10-year deficits agreed to in a tentative deal in the Senate Budget Committee."
That means the plan released Wednesday will most likely have to change substantially to make the math work, analysts say.