A new tax bill proposed by Republicans in the US includes several temporary tax cuts set to expire at the end of 2028. These cuts, impacting both individuals and businesses, are designed to provide short-term financial benefits.
Individual tax cuts include a $500 increase to the child tax credit and a $1,000 bonus to the standard deduction. These benefits would cease as Trump leaves office, potentially creating a 'sugar high' for the economy.
The bill also preserves aspects of the 2017 tax cuts, such as lower individual income rates and a larger standard deduction. However, temporary measures like immediate write-offs for research and development spending could impact business investment decisions.
The Tax Foundation estimates a modest 0.6% increase in GDP from the bill, less than the 1.7% from the 2017 law. New limits on the child tax credit could also affect 2 million American children.
The bill's fiscal cost is estimated at $3.8 trillion, potentially an undercount due to the temporary nature of many provisions. The Committee for a Responsible Federal Budget estimates a $5.3 trillion increase to the deficit if the cuts are extended.