Amendments in recent weeks to President Trump’s “big, beautiful bill” that made business tax credits permanent and removed plans for a “revenge tax” are being loudly cheered by the business community as tweaks that could help spur new economic growth.
But those changes also — a new analysis confirms — provided the lion’s share of a more than $1 trillion price tag increase to the overall bill in recent weeks.
The top driver of these increased projected costs were amendments around corporate tax credits — things like depreciation, factory expensing, and more — that were in the House version on a temporary basis but were made permanent by the Senate.
That change is likely a more honest accounting (an old Washington trick is to implement a tax cut temporarily to limit the costs but then extend it later) and it’s also central to the GOP case as to why this bill will spur growth.
“This bill is really about locking in pro-growth reforms,” noted former House Ways & Means Committee Chairman Kevin Brady in a Yahoo Finance appearance Thursday morning.
He added that these are key provisions for innovation that “I think are going to be very helpful to the economy.”
But it pushed the projected price tag upward, with this swath of business world provisions moving from a cost of about $519 billion in the House bill to over $1 trillion in the Senate product, according to a new comprehensive look at how the two bills compare from the Committee for a Responsible Federal Budget.
The Senate version of the bill is now what appears to be on cusp of being signed into law, with House Republicans likely to approve the bill in the coming hours.
A second change removed a provision that would have allowed the president to levy new duties on multinational businesses in what became known as a “revenge tax.” It was removed after Wall Street objections.
Those two changes — representing a $600 billion increase over the next decade — dwarfed an array of other changes that were made to the now 870-page bill, at least from an accounting perspective.
Other changes — including apparently shallower cuts to things like food assistance and student loans in the Senate version — increased the price tag further. All of those remaining provisions added about $300 billion in increased costs, according to the analysis.
The wave of increased borrowing is set to cost the government another $713 billion in additional interest costs, pushing the increased tally above $1 trillion.
What the business changes do
But even as the changes that made business tax credits permanent and removed plans for a “revenge tax” drove up the costs, they were hailed by both Republicans and some business leaders as providing certainty for business.
They also fueled ambitious projections from the White House of “very big” economic growth it says the bill will spur.
Business owners are already focused on the amended provisions that will reinstate and make permanent an array of tax deductions for corporations for things like property depreciation, capital investments, interest expenses, and research and development costs.
There are also wholly new credits — such as one for new factory construction.
On Thursday, Treasury Secretary Scott Bessent touted the business provisions, especially the factory provisions he has long championed, telling Fox Business that once the bill passes, “Business will have great certainty.”
He added a prediction that “I would expect in the third-fourth quarter, you are going to see factory announcements like we haven’t seen.”
The removal of the so-called revenge tax came at Bessent’s request, taking away a potential revenue raiser after the secretary said it was no longer necessary and also after many companies raised concerns that new taxes could dampen investment in the US.
How much revenue that specific provision would have brought in is debatable, as it was up to the president’s discretion — but economists put the potential tax revenue there at another $116 billion.
The bill also makes permanent the pass-through deduction at a rate of 20%. That deduction — formally known as the 199A deduction — is focused on often smaller businesses organized as S corporations or partnerships.
That was a change that is projected to save money in the Senate version and net out to about $83 billion in additional money in Treasury coffers in the years ahead.
The Business Roundtable hailed the overall bill earlier this week, saying it will be “a swift, decisive signal that America will remain a premier destination for businesses to invest, hire and grow.”
The price tag of the bill is likely to keep these provisions in political focus long after the bill is enacted, with Democrats promising to make the legislation a central midterm election issue and often focused on the cost.
“Don’t ever lecture us about fiscal responsibility: Not now, not ever,” said House Minority Leader Hakeem Jeffries during the final debate Thursday morning as he also called out corporate giveaways.
He added a charge that the GOP is “the party of fiscal irresponsibility over and over and over again and now with this bill, you’ve taken it to another level.”
Ben Werschkul is a Washington correspondent for Yahoo Finance.
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