In a report Friday to Sen. Rick Scott, R-Fla., the agency said that some of the tax changes in the Coronavirus Aid, Relief and Economic Security Act
, signed by President Donald Trump in March, decreased the amount owed by taxpayers and businesses, while the U.S. Department of the Treasury lowered expected revenues by temporarily deferring other tax payments from April 15 until July 15.The CARES Act provision that delayed the payment of payroll taxes from late March to 2021 and 2022 will reduce tax revenues by more than $200 billion, the CBO said citing estimates from the Joint Committee on Taxation. However, the net loss from the delay — after taxes are paid in future years — will total $12 billion since some companies will cease operations before making payments, the letter says.
The payroll tax delay provides "additional liquidity to businesses that may be facing reduced revenues or increased costs as a result of the pandemic," the CBO said. "In effect, those firms have been provided an interest-free loan that equals a fraction of their payroll."
While most of the deferred income taxes due in April will be collected next month, the CBO said it couldn't determine the exact amount that would be collected or how much revenue would come in later years or permanently be lost.
The CBO didn't provide a revenue loss estimate from the CARES Act provision that allows businesses to carry back net operating losses arising in a tax year starting in 2018, 2019 or 2020 to each of the five taxable years preceding the one in which the loss occurred.
The changes are intended to provide immediate cash to businesses and "increase the income taxes that they will pay in the future," the CBO letter says, noting that the deferred taxes might not be collected if a company goes out of business.
The CARES Act also provided $1,200 economic impact payments to taxpayers in the form of a refundable tax credit that will increase deficits by $292 billion over the 2020-2021 period, the CBO letter says. The agency estimated that under current law, it expects the federal deficit to be roughly $3.7 trillion in fiscal year 2020 and $2.1 trillion next year.
Scott didn't immediately respond to a request for comment about the CBO letter. Scott had requested information about budgetary effects of the pandemic from the CBO.
--Additional reporting by David van den Berg. Editing by Joyce Laskowski.
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