The administration proposed new taxes, fees, enforcement and other revenue-raising proposals in its fiscal 2021 budget that it says will bring in an added $339 billion over 10 years.
Even if all these proposals were enacted, and many of them have previously been turned down by Congress, the new revenues would barely begin to pay for the Trump administration’s top budget proposal: Making the provisions in the 2017 tax code overhaul permanent.
The individual income and estate tax provisions in that overhaul expire at the end of 2025. The administration says extending them through 2030, which is the last year in the 10-year budget window, would cost $1.3 trillion, while there would be an estimated $66 billion increase in individual income tax collections over that period due to faster economic growth.
The budget blueprint takes aim at several Democratic favorites: tax breaks to help reduce carbon emissions and energy usage. The total tax increase would be $16.5 billion over a decade, including repeals of the electric vehicle credit worth up to $7,500 of the purchase price; accelerated depreciation of renewable energy property, such as solar, wind and geothermal; the investment tax credit for solar and other clean energy equipment installations for homes and businesses.
The biggest of the administration’s revenue-raising budget proposals would require federal employees to pick up half the cost of annual contributions to the Federal Employee Retirement System, phased in at a 1 percentage point shift per year added to the employee’s cost. That change would save the government, and cost employees, $87.4 billion over 10 years. By 2030, the cost shift would be $13.5 billion a year.
Next on the administration’s list of major revenue-producing budget proposals is a $15 billion, 10-year program integrity cap adjustment that would boost IRS tax collections by an estimated $79 billion, for a net gain of $64 billion.
A third proposal would reap $43.3 billion over 10 years by tightening requirements for valid Social Security numbers when applying for child tax credits. Current law allows a parent without a Social Security number to get the credits if the child has a valid SSN, but the administration’s proposal would not allow that. This would “ensure that only individuals who are authorized to work in the United States could claim these credits by extending the SSN requirement for qualifying children to parents.”
On the “offsetting charges and offsetting receipts” side of the government’s ledger there are a trio of big-dollar proposals in the fiscal 2021 budget.
The largest would raise $34 billion over 10 years by increasing and extending credit guarantee fees that housing giants Fannie Mae and Freddie Mac charge on single-family mortgages packaged into mortgage-backed securities.
Next would be a $26.3 billion increase over 10 years in the insurance premiums that the Pension Benefit Guaranty Corporation charges union pension plans. The PBGC’s multiemployer fund is projected to run out of money by 2025 and the administration says its proposal to increase premiums, particularly for the most underfunded pensions, would give the system a 50-50 chance of avoiding insolvency over the next 20 years.
The third big fee increase would raise $22 billion over 10 years by increasing the passenger security fee charged on each one-way airline trip from the current $5.60 to $6.60 in 2021, and then to $8.25 beginning in 2022.
Correction 7:05 a.m. Feb. 11 | This report was revised to accurately reflect the projected savings from the administration's proposal regarding child tax credits and Social Security numbers.