Increasing Deficit Can Be Traced to GOP Tax Cuts

October 11, 2023

Giveaways to Rich & Corporations Under Bush & Trump Have Caused Over Half Of Budget Shortfalls This Century

Today’s monthly budget report again demonstrates that the federal deficit has been largely driven  by tax cuts for the rich and corporations enacted by Republican politicians over the past 22 years. The clear answer to rising debt is reversing those tax cuts, not cutting public investments that benefit working families. That’s the public call today from Americans for Tax Fairness (ATF), based on a study published last spring by the Center on American Progress (CAP). 

The Congressional Budget Office today reported that the federal deficit for the fiscal year ended last month was $1.7 trillion: that’s $314 billion higher than the previous year. The CBO also reported that revenues fell by an estimated $455 billion (or 9 percent) and were smaller than in fiscal year 2022.

The CAP study found that over half (57%) of the growth in the federal deficits during the 21st century can be blamed on tax cuts mostly benefiting the wealthy and corporations passed by Republican Congresses and signed into law by Presidents George W. Bush and Donald Trump. Excluding spending in response to national emergencies like the Great Recession and Covid, tax cuts are responsible for 90% of the increase in deficits since. Yet Republicans in Congress want to permanently extend parts of the 2017 Trump tax law scheduled to expire in 2026, expanding the deficit by another $3.85 trillion

“As reliable as falling leaves in October, any discussion of deficits prompts Republican calls for cuts to services supporting kids, the elderly, working families and struggling communities. But the real answer is fairer taxes on the rich and corporations,” said David Kass, ATF’s executive director. “Let’s finally start addressing the deficit issue from the right direction: it’s a revenue problem. We’ll get our fiscal house in order when the wealthiest households and most profitable corporations start paying their fair share of taxes.”

President Biden and congressional Democrats began the necessary reform process last year with enactment of the Inflation Reduction Act. It imposed a minimum tax on the nation’s biggest corporations, some of which were going tax-free in multiple years; beefed up tax-enforcement focused on rich and corporate tax cheats; and instituted a tax on stock buybacks that further enrich CEOs and other wealthy shareholders at the expense of worker wages and business investment.

Biden and leading Democrats have proposed further tax reforms on the rich and corporations, including special taxes on billionaires that would ensure the richest Americans pay tax annually on their rising fortunes just like workers pay tax all year, every year on their wages.