Washington, Jan 10 (AP) At the very top of Republicans' 100-day agenda with President-elect Donald Trump in the White House and GOP lawmakers in a majority is the plan to renew some USD 4 trillion in expiring tax cuts.

On Friday, the US Treasury released a new analysis of the various ways that extending the expiring individual and estate tax provisions of Trump's 2017 tax overhaul — known as the Tax Cuts and Jobs Act — could cost the government, and who would directly benefit the most from the legislation's permanent extension.

For instance, the Treasury's Office of Tax Analysis estimates that the top 0.1 per cent of earners would get a tax cut of USD 314,000 under a full extension of the individual and estate tax provisions, with the total cost of those tax cuts amounting to USD 4.2 trillion between 2026 and 2035.

If the tax cuts were only extended for families making USD 400,000 or less a year — a promise President Joe Biden and Vice President Kamala Harris made on the 2024 campaign trail — that would reduce the cost of extending expiring TCJA provisions to USD 1.8 trillion, or less than half the cost of extending all the individual and estate tax cuts.

A Treasury official said the full analysis is meant to give Congress options for the difficult choices ahead — namely how to pay for the tax cuts as the federal debt sits at over USD 36 trillion.

The TCJA, the biggest tax change in a generation, is the signature domestic achievement of Trump's first term and an issue that may define his return to the White House.

Trump favours extending all the expiring provisions, while Republicans have committed to bringing down federal spending. How to pay for the tax extensions while fulfilling the incoming president's demands will make congressional negotiations difficult.

On top of his plan to extend the tax cuts, Trump on the 2024 campaign trail introduced proposals aimed at working- and middle-class Americans: exempting earned tips, Social Security wages and overtime wages from income taxes.

Lawmakers are also considering temporarily doubling a USD 10,000 cap on state and local tax deductions for most married couples, which the Committee for a Responsible Federal Budget estimates would reduce revenues by USD 170 billion.

Republicans have promised to roll back the energy tax credits provided by Biden's Inflation Reduction Act as well as income tax hikes on the wealthiest Americans.

Most of the TCJA's changes to the individual tax code are temporary and are scheduled to sunset by the end of 2025.

The Urban-Brookings Tax Policy Centre in July reported that households making about USD 450,000 or more would receive more than 45 per cent of the benefits of extending key provisions of the 2017 act.

And the Penn Wharton Budget model estimates that permanently extending the TCJA would increase deficits by USD 4 trillion over the next decade.

Republicans say the tax cuts spur economic growth, as lower taxes generate additional economic activity. “Many of the provisions of the TCJA were designed to foster greater economic growth,” the US Chamber of Commerce's Neil Bradley and Watson McLeish said in an August report. (AP) PY PY

Extension of Trump-era tax cuts would concentrate benefits among highest earners and increase federal deficits. Extension of Trump-era individual and estate tax provisions would deliver concentrated benefits to the highest earners while increasing federal deficits; limiting extensions by income threshold would lower total fiscal cost and alter benefit distribution. Legislative options-including eligibility caps, targeted wage exemptions, temporary increases to state and local tax deduction limits, or rollbacks of energy tax credits-represent trade-offs between distributional outcomes and deficit impact and are presented to inform congressional choices among scope, offsets, and fiscal priorities.