Are Sunset Provisions The Shell Game of Congressional Budgeting?

What’s the story?

Like many pieces of legislation with huge budgetary implications, the GOP tax reform bill includes a host of sunset provisions. Sunset provisions end certain aspects of legislation after a certain date, usually 5 - 10 years in the future, unless additional legislative action is taken.

Now you see it! Now you don’t!

By including sunset provisions in major bills, lawmakers can give stakeholders what they want while still staying within budget boundaries. But what gets sunset and what doesn’t is worth paying attention to, since it can affect the long term consequences of legislation.

Why does it matter?

Technically, a sunset provision can be applied to any aspect of any type of legislation, ending that aspect of the legislation after a certain date. The Patriot Act, for instance, originally contained sunset provisions that ended in 2005. Extensions were approved until 2006, then again in 2010.

In terms of the current tax reform bill, sunset provisions would allow the legislation to not increase the federal deficit by more than $1.5 trillion in the first 10 years. This means the bill could pass in the Senate with a simple majority vote.

This deficit requirement is part of the Byrd Rule, and falls under the larger umbrella of "budget reconciliation".

So, how does the current GOP tax reform plan conform to the Byrd Rule, while still providing individual and corporate tax cuts? It sunsets the individual tax cuts, leaving the business tax cuts permanent.

What this means is that, unless additional legislation is passed at some point down the road, the tax cuts enjoyed by individuals and families under the GOP plan would go away in 5-10 years, returning to current rates. But, other provisions, like business tax cuts and the elimination of the individual mandate under the Affordable Care Act, would remain permanently.

Based on estimates reported by the Joint Committee on Taxation, by 2027 individuals making less than $75,000 will be paying more in taxes because the tax cuts in the current GOP plan will sunset.

Estimates from the CBO addressed the potential effect of the repeal of the individual health insurance mandate, which makes the projection of effects worse. According to their report, non-group premiums would rise by 10% and 13 million more people would be without health insurance by 2027.

Republican leaders dispute both analyses, saying that including healthcare costs and subsidies is wrong because buying insurance is a choice. Additionally, they argue that Congress regularly votes to extend expiring tax cuts at the end of every year, so the sunsets are not a problem.

What do you think?

Do sunset provisions matter to you when contemplating support for major legislation? Is short term gain more important than potential long term loss? Do you trust that Congress will step up and make some provisions on individual taxes permanent to mitigate the effects of the plan on middle to low income individuals, or are they just passing the buck to a future set of leaders?

Tell us in the comments what you think, then use the Take Action button to tell your reps!

Take Action

— Asha Sanaker

(Photo Credit: Casino.org )

RELATED READING:

• Senate GOP tax bill hurts the poor more than originally thought, CBO finds — Washington Post

• The Good, the Bad, and the Ugly of the House Tax Bill — Committee for a Responsible Federal Budget

• Updated Senate Tax Bill Sunsets Personal Tax Changes, Targets Obamacare — US News & World Report

• The Republican tax reform bill will live and die by this obscure Senate rule — Vox