More than $3.4 trillion in individual income and estate tax cuts are set to expire at the end of 2025. The Tax Cuts and Jobs Act (TCJA), signed into law by former President Donald Trump in 2017, contained a range of individual income and corporate tax reductions, making it one of the largest tax cut packages in US history. Supporters argue that it accelerated economic growth and business investment, while opponents contend that the rich benefited most from the law. President Joe Biden would allow the income tax cuts for the rich to expire while protecting those who earn less than $400,000 annually from any tax hikes. He has also proposed raising the corporate tax rate to 28% [cdbd110d].
The debate over extending the tax cuts will have significant implications for both taxpayers and the federal budget. Extending the individual and estate tax provisions would add more than $3.4 trillion to the federal deficits over a decade, according to the Congressional Budget Office. Biden's approach aims to address income inequality by allowing the tax cuts for the wealthy to expire, while Trump promises significant tax cuts for people of all incomes and businesses. The decision on whether to extend the tax cuts will impact the economy, federal spending, and the national deficit. Biden's proposed tax rate increase would reverse part of the 2017 Republican tax cuts, potentially making the US corporate rate one of the highest among major economies. Trump had previously aimed to lower the corporate tax rate to 20% [c379542a] [cdbd110d].
The Tax Cuts and Jobs Act is set to expire in 2025, but Republicans, including former Vice President Mike Pence's foundation, Advancing American Freedom, are pushing for its extension. Pence's foundation is launching a $10 million campaign to preserve the Trump-era tax cuts that are set to expire after next year. The group released a 13-page blueprint outlining arguments to be made to Capitol Hill and swing state voters. The campaign aims to urge conservative leaders to join the fight and envisions a lengthy campaign that will continue into 2025. The decision to keep the tax code as approved in the 2017 tax law or make adjustments will depend on the power centers in the House and Senate and which party controls the White House. Democratic President Joe Biden has proposed keeping the tax cuts for people making under $400,000 a year while raising the corporate rate and introducing higher taxes on the wealthy. Trump also wants to keep the tax cuts for many households but proposes lowering the corporate tax rate to 20 percent. Former Sen. Pat Toomey of Pennsylvania, a Republican who was instrumental in crafting the 2017 tax bill, is a strong supporter of the foundation's campaign. Extending the provisions of Trump's Tax Cuts and Jobs Act would increase deficits by nearly $5 trillion into 2034, according to a CBO report in May [876b2ad5].
The upcoming presidential debate presents an opportunity for Biden to draw a contrast with Trump on the federal budget deficit and its influence on middle-class living standards. Biden plans to oppose the extension of the tax cuts and push for higher taxes on wealthy households and corporations. The Congressional Budget Office estimates a budget deficit of 7% of GDP this year, which is expected to decline if the TCJA is allowed to expire. However, if Trump wins the election, the deficit will likely explode due to tax cuts for the rich, increased defense spending, and no cuts to Social Security and Medicare. Biden's deficit argument is strong on both the merits and the politics, as taxing the rich is the most popular approach to addressing America's fiscal issues. The outcome of the election will shape the debate on taxes next year, with taxes on the rich rising and the deficit shrinking if Democrats do well, and the deficit exploding and the bankruptcy of Social Security accelerating if Republicans do well. Biden needs to emphasize these points in the debate to highlight the consequences for middle-class voters in terms of mortgages, auto loans, and small businesses in need of financing [7ce2a2cb].
Republicans, including Representative Jason Smith, are focused on extending the 2017 Trump tax cuts and preventing President Joe Biden's plan for a nearly $7 trillion tax increase in 2025. The Ways and Means Committee has held hearings to gather input on the Trump tax policies, which have been credited with raising median household income, boosting the economy, and reducing poverty and unemployment rates. The 2025 tax cuts bill should renew existing tax policies and embrace new relief ideas, such as eliminating income taxes on tips. In contrast, Biden is fighting to repeal the Trump tax cuts and increase IRS audits on low- and middle-income earners. The consequences of the Left's tax-and-spend agenda include a stagnant economy, high inflation, and high interest rates. Representative Jason Smith is leading the effort to deliver tax relief for working people and prioritize small businesses [40234749].