What is an offset?
With the announcement of the President’s tax proposal, many questions have arisen about whether the plan will be “offset”.
In legislative budgeting an “offset” means that any spending is balanced out by cutting expenditures or raising revenues elsewhere. Those are called “pay-fors.”
When it comes to taxation, eliminating a tax deduction or other tax preference is treated the same way as spending, since you are technically removing revenue from the country’s projected revenue.
SO, back to the topic of the week: the big question is, will President Trump’s proposed 15% tax reduction be “offset” with other spending cuts or tax increases; or will it increase the annual budget deficit?
