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1 Garrett Watson, et al., Details and Analysis of Canceling the Scheduled Business Tax Increases in Tax Cuts and Jobs Act 1 (2022)

handle is hein.taxfoundation/dtsadanys0001 and id is 1 raw text is: Details and Analysis of Canceling the Scheduled Business Tax Increases in Tax Cuts and Jobs Act Garrett Watson Senior PolicyAnalyst, Modeling Manager Cody Kallen Resident Fellow Erica York Senior Economist, Research Manager Alex Durante Federal Tax Economist FISCAL FACT No. 802 Nov. 2022 The Tax Foundation is the nation's leading independent tax policy research organization. Since 1937, our research, analysis, and experts have informed smarter tax policy at the federal, state, and global levels. We are a 501(c)(3) nonprofit organization. ©2022 Tax Foundation Distributed under Creative Commons CC-BY-NC 4.0 Editor, Rachel Shuster Designer, Dan Carvajal Tax Foundation 1325 G Street, NW, Suite 950 Washington, DC 20005 202.464.6200 taxfoundation.org Key Findings • Starting in 2022 and continuing through 2026, businesses will face several tax changes scheduled as part of the Tax Cuts and Jobs Act (TCJA), including a switch to five-year amortization of R&D expenses, the gradual phaseout of 100 percent bonus depreciation, a tighter interest deduction limitation, and an increase in international tax rates. • Canceling the business tax changes would increase long-run economic growth by 0.6 percent and national income by 0.5 percent. The capital stock would increase by 1 percent, wages by 0.5 percent, and employment by 105,000 full-time equivalent jobs. After-tax incomes would increase across the income spectrum, by an average of 0.6 percent in the long run dynamically. • The 10-year cost of canceling the TCJA business tax increases is about $751 billion on a conventional basis, but the cost falls to about $568 billion on a dynamic basis when factoring in additional tax revenue from economic growth. Over the long run, the annual cost would be much smaller after timing-related changes associated with 100 percent bonus depreciation and R&D amortization fade, costing less than $20 billion annually in 2022 dollars on a dynamic basis. • Due to the resulting economic growth from making these provisions permanent, deficits and debt as a share of GDP would decline on a dynamic basis. Debt as a share of GDP in the long run (30 years) falls from 185 percent under baseline current law in 2052 to 184.2 percent with these provisions made permanent.

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