Biden and Trump Offer Competing Tax Proposals, but Both Ignore Economic Reality
In a world in which economic reality mattered to politicians, grandiose spending plans coupled with soaring government debt would pretty much preordain grim tax policy. But we don’t live in that world. In ours, tax and spending proposals are crafted based on their appeal to target audiences of voters, with no regard for balancing books or averting financial catastrophe.
With that in mind, it’s clear that there are significant differences between the plans that Donald Trump and Joe Biden harbor for our money. Basically, Trump plans to steal less of other people’s cash then Biden does, though neither has any serious suggestions for paying for their spending schemes.
First, let’s note that the president has been very vague about his tax plans, offering little beyond broad promises of more tax cuts in addition to those provided by the 2017 Tax Cuts and Jobs Act (TCJA).
“Without further details or clarification, it is difficult to fully analyze President Trump’s second term tax policy agenda,” cautions the Tax Foundation. “Broad themes of the president’s agenda include providing tax relief to individuals and tax credits to businesses that engage in desired activities, while the status of expiring TCJA provisions and tariffs seems uncertain.”
“We’re left with a handful of vague ideas and bullet-point descriptions about various tax cuts the president would like to pursue if he’s re-elected,” agrees Kiplinger. The financial publication adds that we should “expect the president to seek permanent status for at least some of the provisions in the Tax Cuts and Jobs Act (TCJA) of 2017 that lowered taxes for individuals. Right now, most of those tax cuts are set to expire after 2025.”
The TCJA, then, is probably our best insight into Trump’s intentions. The law dropped the corporate tax rate from 35 percent to 21 percent. It also cut personal income taxes for a majority of Americans.
“About 65 percent of households paid less in individual income taxes in 2018 as a result of the TCJA,” reports the Tax Policy Center, a project of the Urban Institute and the Brookings Institution. “About 6 percent paid more. The rest paid about the same.”
“Experts are divided on whether the tax law was a good idea. But there is little disagreement on this core point: Most people got a tax cut,” notes The New York Times.
Many of the tax reductions of the TCJA are set to expire in 2025, however. The expiration date was inserted in order to prevent a Senate filibuster b
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