GOP Tax Proposal Exceeds Budget Cap by $500B

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GOP Tax Proposal Exceeds Budget Cap by $500B \ Newslooks \ Washington DC \ Mary Sidiqi \ Evening Edition \ A new estimate from Congress’s nonpartisan tax scorekeeper reveals that an early version of House Republicans’ tax plan would cost nearly $5 trillion, overshooting the budgetary limits set earlier this year. Lawmakers must now decide whether to trim the bill or find major offsets.

Quick Looks

Joint Committee on Taxation estimates plan at $4.96 trillion.
Cost exceeds House GOP budget cap by at least $500 billion.
GOP seeks $2 trillion in spending cuts to offset tax breaks.
Skinny version extends income tax rates and Child Tax Credit.
Plan omits Trump’s tipped-wage tax repeal and SALT deduction.
Business tax breaks and clean energy cuts still under debate.
Full proposal expected Monday; markup set for Tuesday.
Committee for a Responsible Federal Budget urges revisions.

Deep Look

House Republicans’ long-awaited tax overhaul could carry a staggering $5 trillion price tag, according to a new analysis by the Joint Committee on Taxation (JCT), Congress’s nonpartisan tax scorekeeper. The preliminary estimate, released Saturday evening, puts the plan’s projected cost well above the $4.5 trillion ceiling established in the GOP’s own budget resolution earlier this year.

As the House Ways and Means Committee, led by Chairman Jason Smith (R-Mo.), prepares for a markup session on Tuesday, the findings underscore the major fiscal balancing act now confronting Republican leaders. The full legislative text is expected Monday.

Speaker Mike Johnson (R-La.) had previously floated a $4 trillion tax plan tied to $1.5 trillion in spending cuts, which would still fall short of offsetting the full estimated cost unless major changes are made or new revenue sources are found.

“The deficit impact of the bill is well above the Ways & Means allowable increase of $4.0 to $4.5 trillion, so lawmakers will either need to make adjustments, include offsets, or both,” wrote the Committee for a Responsible Federal Budget in a Saturday analysis.

What’s in the GOP’s Early Tax Plan

The “skinny” version of the House GOP tax plan released late Friday includes a set of core tax extensions and enhancements, aimed at preserving elements of the 2017 Tax Cuts and Jobs Act, which are set to expire at the end of this year. Key provisions include:

Permanent extension of individual income tax rate cuts.
Boosted standard deduction.
Temporary increase in the Child Tax Credit.

What’s missing from this early draft, however, is just as noteworthy. The proposal does not include some of former President Donald Trump’s campaign priorities, such as:

Eliminating taxes on tipped income.
Restoring several large-scale business tax breaks.
Repealing the $10,000 cap on the state and local tax (SALT) deduction, a contentious issue for Republicans from high-tax states like New York, New Jersey, and California.

Despite weeks of internal talks, no agreement has been reached on SALT—a politically explosive issue that helped finance the original 2017 tax law but now threatens party unity, especially in competitive districts.

Massive Price Tag, Few Offsets—For Now

The nearly $5 trillion cost raises alarms about fiscal sustainability and procedural viability, particularly if Republicans hope to move the plan through the budget reconciliation process that allows legislation to bypass a Senate filibuster with a simple majority.

The current Republican budget framework allows for $4.5 trillion in tax cuts—but only if paired with $2 trillion in spending cuts. Without those offsets, the GOP faces not only an internal budget crisis but also the risk of noncompliance with reconciliation rules, which require deficit neutrality over a 10-year window.

To close the gap, Republicans are reportedly eyeing a number of cost-saving offsets, including:

Rolling back clean energy credits from the Inflation Reduction Act, passed by Democrats in 2022.
Increasing tax rates on private foundations and high-net-worth nonprofit entities.
Tightening deductions and closing loopholes in corporate taxation.

Still, no formal offsets have been released, and key details of the full package remain under wraps as negotiations continue.

Political Stakes Ahead of 2024

The GOP’s tax plan is not just a policy document—it’s a political statement ahead of the 2024 elections, with Republicans aiming to rally their base and deliver on long-promised fiscal priorities. But the large price tag and the unresolved disagreements—particularly over SALT—pose potential risks to unity.

Trump’s absence from the initial proposal is also notable. While the former president continues to push tax-cut messaging on the campaign trail, his high-cost promises, including zero taxes on tips, would likely push the total cost even further beyond budget constraints if added later.

Meanwhile, Democrats are expected to hammer the plan as fiscally reckless and skewed toward wealthier Americans, setting the stage for a heated partisan battle in the coming weeks.

Next Steps and Timeline

With the House Ways and Means Committee’s markup scheduled for Tuesday, GOP leaders are expected to release the full legislative text Monday afternoon. Depending on the political dynamics, they may attempt to move the plan to the House floor quickly or delay it until additional offsets are negotiated.

Whatever shape the final bill takes, the Saturday night cost estimate ensures that fiscal scrutiny and intra-party tension will dominate the days ahead.