Biggs BBA Leaves Congress Many Revenue Options

To check the excessive federal borrowing that drives up the cost of living and undermines prosperity, a balanced budget amendment (BBA) proposal by Rep. Andy Biggs is coming to the House floor next week. A next-generation BBA like this will also push Congress to fix the way it operates and improve fiscal democracy.

During the House Judiciary Committee markup, several Democrats claimed that it would only allow tax increases with supermajorities. That’s not correct for base broadening and non-tax revenue (see below).

Section 4 says, “Any bill to levy a new tax or to increase the rate of any tax shall not become law unless approved by two-thirds of the whole number of each House of Congress by a roll call vote.”

Enacting a new tax or a tax rate increase would not be impossible, but it would require broad, bipartisan support. Any other method of increasing revenue collections would be subject to normal legislative requirements, as would changes to spending programs.

Which revenue options would not need supermajority support?

Base-broadening: Reducing special treatment

Base-broadening means reducing “those revenue losses attributable to provisions of the Federal tax laws which allow a special exclusion, exemption, or deduction from gross income or which provide a special credit, a preferential rate of tax, or a deferral of tax liability,” under current law.

The latest “Estimates of Federal Tax Expenditures for Fiscal Years 2025-2029” by the Joint Committee on Taxation tallies tax expenditures of $2.2 trillion for the current fiscal year from the income tax base. These estimates do not include the substantial tax expenditures from payroll, excise, or other tax bases.

In other words, eliminating all tax expenditures would be roughly sufficient to balance the budget. That would, however, include eliminating provisions that provide economically rational cost-recovery for business expenses and those that avoid or mitigate double taxation of the same income. Without those categories, the tax expenditures total is about half as much.

Offsetting collections and offsetting receipts: “User fees,” more or less

Let us turn to non-tax revenue sources. If a tax results “from the exercise of the Federal Government’s sovereign or governmental powers,” then a non-tax may be, roughly speaking, a user fee for a government-provided service. They are counted as negative spending and are called offsetting collections and offsetting receipts.

These categories were about $740 billion in fiscal year 2025, which is 14 percent of reported revenue.

Changes to offsetting collections and receipts could reduce federal borrowing by reducing net appropriations needed to finance such programs. For example, in FY2026, $224 billion in Medicare premiums offsets from nearly $1.3 trillion in gross Medicare spending for a net taxpayer cost of $1.06 trillion.

Balancing the budget should focus on spending restraint

Congress would have extensive revenue options under standard procedures within the pending BBA. That said, rapid spending growth on Social Security, major federal health programs, and interest expense means that balancing the budget through tax increases is impossible.

Furthermore, taxes impose deadweight losses on society well above the amounts collected. The damage grows exponentially with rising tax rates. Likewise, base broadening increases the effective tax rate of affected activities, so the goal of tax reform is generally to broaden the base while reducing rates.

Much current spending does not justify the social costs of associated taxes and debt. Scaling back such net-negative activities should be Congress’ focus when balancing the budget.

The BBA coming to the floor would, however, retain many spending and revenue options at standard vote thresholds. Claims to the contrary may be misleading political cover to avoid taking responsibility for addressing the federal government’s rapidly deteriorating finances.