07/18/17: A government budget bill introduced today by the U.S. House of Representatives indicates that the House will not implement President Trump’s income tax proposals anytime soon, with the text introducing the bill stating, “The resolution also instructs the Ways & Means Committee to produce deficit-neutral tax-reform legislation ….”

Considering the fact that the bill includes a request for substantial increases in military spending, and that the Congressional Budget Office does not take into account the fact that reductions in income-tax rates have historically led to increases in tax revenues, the deficit-neutral requirement mentioned above suggests, essentially, that a passage of the House’s budget bill would not include any meaningful reductions in income-tax rates.

Although changes to the tax code could theoretically be “revenue-neutral” even with reductions in income-tax rates, such an outcome would require massive cuts to various government programs, such as Medicare, disability aid, Temporary Assistance for Needy Families and unemployment compensation. However, our experience suggests there’s almost no chance of that occurring, as doing so would put too many members of the Congress at risk of getting re-elected.