A new House tax package could more than double its economic impact—if Congress makes certain business provisions permanent, according to new analysis from the Tax Foundation.
What’s in the House tax package?
The proposal, recently approved by the House Ways and Means Committee, extends several major provisions from the 2017 Tax Cuts and Jobs Act (TCJA) through 2029. These include:
- 100% bonus depreciation
- Expensing for R&D investments
- A more generous interest deduction
- New 100% bonus depreciation for qualifying structures
However, all are set to expire after 2029—something experts warn could undermine long-term growth.
Permanent tax cuts could double economic impact
If Congress makes the TCJA’s cost recovery provisions permanent, the U.S. could see 1.0% long-term GDP growth, compared to just 0.6% under the current plan.
Key economic gains from permanence include:
- Capital stock increase: +1.6%
- Wage growth: +0.7%
- Income boost for Americans: +0.9%
- Job creation: Over 1 million full-time jobs
Comparison: Temporary vs. Permanent Effects
| Impact Area | Temporary Plan | With Permanence |
|---|---|---|
| GDP Growth | +0.6% | +1.6% |
| Capital Stock | -0.2% | +1.6% |
| Wages | -0.1% | +0.7% |
| Jobs | +794,000 | +1,054,000 |
What’s the trade-off?
While making the provisions permanent increases the conventional 10-year cost from $4.1 trillion to $4.6 trillion, the dynamic cost (which accounts for economic feedback) rises just 6%, from $3.3 trillion to $3.5 trillion.
Experts argue the long-term gains justify the modest cost increase—especially in a slowing economic environment where capital investment and wage growth are key policy goals.
Why does permanence matter?
The current plan sunsets key cost recovery measures in 2029, which discourages businesses from making long-term investment decisions. According to the Tax Foundation, only permanent changes will deliver the full pro-growth potential.
“Lawmakers should not compromise on permanence for the most pro-growth provisions,” analysts wrote.
What happens next?
As debate continues in Congress, advocates are pushing for an amendment that would make the four TCJA-related provisions permanent. If approved, it could reshape the economic and fiscal landscape heading into the next decade.
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