The U.S. House of Representatives narrowly passed President Trump’s budget proposal, marking a pivotal moment in shaping the future of U.S. fiscal policy. With a 216-214 vote, the resolution secures the permanence of the 2017 Tax Cuts and Jobs Act (TCJA), cementing its impact on taxpayers and the economy. However, the vote also sparked serious concerns over long-term fiscal stability and the mounting deficit.
The vote was nearly split along party lines, with only two Republicans voting against the measure. While this marks a legislative win for the Trump administration, the budget also unlocks the reconciliation process, clearing the way for the Senate to pass the final legislation with a simple majority. This move brings the tax cuts, set to expire in 2025, into permanent law, solidifying a crucial part of Trump’s economic legacy.
The TCJA will now provide permanent tax cuts for individuals and corporations, but here’s the crucial point: the middle class actually stands to gain the largest share of the benefits. The TCJA’s tax cuts disproportionately benefited middle-income earners rather than the top earners, contrary to initial criticism.
For households making between $50,000 and $200,000 annually, the savings are substantial. Households making between $50,000 and $75,000 saved an average of 16.58% on their income taxes annually. Those earning $75,000 to $100,000 saved about 11%. The most significant savings came from the increase in the standard deduction and the expanded Child Tax Credit, which now offers $2,000 per child. The savings are set to be felt over the next decade, with those in the $100,000 to $200,000 range expected to save an average of $13,500.
While critics argue that the tax cuts benefit corporations and high earners more, the fact remains that the middle class benefited far more than initially expected.
As much as the tax cuts have been praised for stimulating economic growth and providing tax relief, especially for middle-income households, the cost of this victory is steep. The Congressional Budget Office (CBO) estimates that the permanent tax cuts will add $1.9 trillion to the federal deficit over the next decade. These numbers are alarming, and they’ve set off a fierce debate over the long-term consequences of such a fiscal policy.
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https://thehill.com/homenews/house/5241651-house-republicans-trump-budget-framework-vote/