In a Season 4 episode of Parks and Recreation, protagonist Leslie Knope struggles to balance her job at the Pawnee Parks Department, her campaign for city council, and her obligations to her friends. After a series of hijinks, sage Parks Department head Ron Swanson suggests Leslie take some leave at work to focus on her campaign. As Swanson tells her, “Never half-ass two things. Whole-ass one thing.”
When it comes to tax reform in 2025, Congress should take Ron Swanson’s advice.
At the end of 2025, most of the individual tax reforms from the Tax Cuts and Jobs Act (TCJA) are scheduled to expire. If they expire, taxpayers will see higher tax rates, a lower child tax credit, a lower standard deduction, and more complicated tax filing. Additionally, some of TCJA has already started phasing out. Businesses now face penalties for investment in equipment and research and development (R&D).
While not perfect, TCJA was a broad improvement in the tax code. “Just make it permanent” sounds like a simple solution. Unfortunately, there is one problem with that approach: it will be expensive. According to Tax Foundation’s modeling, making all of the Tax Cuts and Jobs Act permanent would cost $3.47 trillion in revenue between 2025 and 2034, even after taking into account revenue generated by additional economic growth.
Given increased focus on the deficit, that is not a realistic option. Policymakers will not get everything. And there are two paths they could follow: the half-ass option, and the whole-ass option.
The half-ass option would be to extend everything – but only for a year or two. On paper, that would cost much less than making everything permanent. However, in practice, this could end up being worse across the board. Each law that extends the tax cuts for a year or two might increase the deficit by much less than $3.47 trillion on paper, but if every year or two you temporarily extend the tax cuts again, by the end of the decade you end up at the same place fiscally.
Not only do you end up raising the deficit by just as much, but you also lose a lot of the economic benefits of the tax cuts. By making a huge portion of the tax code subject to the political process every year, Congress creates policy uncertainty that reduces long-term investment. Extending large tax cuts temporarily makes it easier to keep constituents happy and hides hard trade-offs but will in the long run put the United States in a worse position economically while still raising the deficit just as much.
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Whole-assing tax reform would involve making a few key provisions permanent, even at the expense of letting some other tax cuts expire or increasing some other taxes to pay for them. Making some tax cuts (like 100 percent bonus depreciation) permanent would improve long-term incentives for investment and growth and would take them out of an annual political circus to get them extended for just one more year. The result: lower deficits, stronger long-run growth, and (perhaps) less of Congress’s time devoted to last-minute efforts to extend tax cuts for just one more year for the next decade.
Like Leslie Knope, Congress must prioritize. They could keep the investment incentives, the individual rate reductions, the higher child tax credit and oh pretty please can we raise the SALT deduction cap too, for just one year, or two years, leaving no problem fixed but kicking the can down the road, attempting to do everything but ultimately achieving nothing. Or they could do as Ron Swanson suggests: lasering in on one (or in the context of the U.S. tax code, probably a few) key improvements the TCJA made and making them fixtures of the tax system for good.
Alex Muresianu is a senior policy analyst at the Tax Foundation. You can follow him on X at @ahardtospell.
