Biden’s Tax Hikes: The Tax Foundation discovers that a majority of Americans will encounter increased taxes if the measures from the 2017 tax legislation are not prolonged. Several key provisions of the 2017 tax law are slated to lapse by 2025. Both Democrats and Republicans are preparing for a heated tax battle as the expiration of cuts approaches.
President Biden’s insistence on allowing the expiration of provisions from the tax law enacted during the tenure of then-President Donald Trump has stirred a contentious debate, as new analysis suggests that such a move would invariably lead to tax hikes for virtually all Americans.
Currently, Biden and lawmakers are embroiled in intense discussions regarding the fate of the provisions set to expire next year, as delineated in the 2017 law.
While a faction of lawmakers, predominantly Republicans, advocates for the extension of most provisions, many Democrats lean towards either partial extension or modification of the existing framework.
In a statement underscoring his stance, Biden emphasized the impending expiration of what he termed as Trump’s “pride and joy” – the $2 trillion tax cut, which, according to him, disproportionately favored the affluent and corporate entities while exacerbating the federal debt. Biden categorically asserted, “That tax cut is going to expire. If I’m reelected, it’s going to stay expired.”
Despite criticisms surrounding the Tax Cuts and Jobs Act for purportedly favoring the wealthy, it ushered in a slew of benefits for the broader populace, including simplification of individual income taxes and across-the-board reductions in tax rates – benefits that now face the risk of expiration.
The implications of congressional inaction are dire, as highlighted by the findings of the Tax Foundation, a right-leaning entity, which predicts that without intervention, the majority of Americans will contend with elevated taxes and a labyrinthine tax structure commencing in 2026.
The tax overhaul not only recalibrated individual tax rates but also slashed the corporate tax rate from 35 percent to 21 percent, in addition to implementing reductions for pass-through entities and international corporate income.
The tangible impact of these reforms is underscored by the Tax Foundation’s calculations, which reveal that families across various income brackets stand to face significant tax hikes should the provisions lapse. For instance, a married couple with two children and a joint income of $165,000 could see their taxes escalate by nearly $2,500 annually, while a single parent earning $52,000 with two dependents might witness an increase of $1,474.
Looking ahead, the fate of these provisions hinges on the outcome of future elections. Should Republicans regain control of both the White House and Congress, there’s a strong likelihood of extending most, if not all, of the expiring provisions. Conversely, if Democrats secure a majority or if Biden secures reelection, deliberations will ensue regarding which provisions warrant extension.
Biden has consistently pledged not to increase taxes for individuals earning $400,000 or less, advocating for higher taxes on the wealthiest Americans and corporations to ensure equitable contributions.
In line with this, the president has proposed measures such as elevating the tax rate on long-term capital gains and dividends, alongside plans to hike the corporate tax rate to 28 percent and the top individual income tax rate to 39.6 percent for incomes surpassing $400,000.
The impending tax conundrum unfolds against the backdrop of a burgeoning deficit. Extending all expiring provisions of the Trump tax law is estimated to balloon the deficit by over $3.3 trillion over the next decade, according to projections by the Congressional Budget Office. Conversely, Biden’s tax proposals aim to generate nearly $5 trillion in revenue while concurrently reducing the deficit by $3 trillion over the same period.
In summation, the Trump tax cuts have been instrumental in fostering economic growth and simplifying the tax landscape for American families. As policymakers navigate the complex terrain of tax policy, the imperative lies in striking a balance between fiscal responsibility and ensuring continued prosperity for all Americans.
