IMF Slams Donald Trump's Tax Bill As $4 Trillion Threat To US Economy

(MENAFN- Live Mint) The International Monetary Fund (IMF) has sounded alarms about Trump's new tax bill, warning it could blow up America's deficit by $4 trillion over ten years.

The legislation extends Trump's 2017 tax cuts while adding new breaks like tax-free tips and overtime pay. Despite some spending cuts, the plan would still add $3.4 trillion to the deficit before interest costs.

IMF spokesperson Julie Kozack stressed this "runs counter" to needed debt reduction, especially with US debt nearing 98% of GDP, up from 73% a decade ago.

Growth claims vs. expert warnings

Trump's team argues tax cuts will boost growth to 3%, offsetting losses through more tax revenue and tariff income. But economists overwhelmingly disagree.

Six Nobel Prize winners call the bill "shocking" for hurting low-income families while helping the wealthy.

The nonpartisan Congressional Budget Office predicts it would shrink household resources for the poorest Americans by 4% by 2033. Harvard economist Ken Rogoff notes similar past tax cuts“led to soaring deficits rather than self-sustaining growth.”

Global ripple effects emerge

This controversy hits as Moody's stripped America's last AAA credit rating, citing debt concerns.

The IMF also cut its 2025 US growth forecast to 1.8%, partly blaming policy uncertainty.

A dangerous clause (Section 899) lets the Treasury tax foreign investors 20% if their home countries impose "unfair" taxes, a move experts fear could spook global markets.

Also Read | Elon Musk pledged a new party if tax bill passed-Now it has. What's next?

With the bill nearing a Senate vote, Treasury Secretary Scott Bessent dismisses critics, calling traditional forecasts“lagging indicators.”

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