November's elections will put $6 trillion in taxes at stake as decisions about tax cuts set to expire after 2025 widely differ between President Joe Biden and Republicans.
On the Republican side, lawmakers are calling to extend the tax cuts put in play in 2017 under then-President Donald Trump, at a cost of $4 trillion over 10 years, while Biden has proposed extending the tax cuts for households earning under $400,000 a year while allowing the other cuts to expire, reports The Wall Street Journal.
Biden also wants to raise taxes on corporations and top earners, generating more than $2 trillion.
"It's just striking both how clear and how large the gap is between these two approaches," said Brian Deese, Biden's former National Economic Council director, with Heritage Foundation Fellow Stephen Moore, a Trump tax adviser, agreeing.
"That's probably as far from where Trump wants to go as you could possibly get," Moore said.
With the tax cuts in 2017, corporate and individual tax rates were cut and tax breaks were curtailed. The corporate cut is permanent but the individual tax changes will lapse in 2025.
If Congress doesn't extend the individual tax changes, that will mean the standard deduction will shrink while marginal rates climb, and a deduction in place for closely held businesses will end.
The Congressional Budget Office has projected that the United States will bring in $60 trillion in revenue between 2024 and 2033. Biden's plan aims to bring in more while the Republican plan would go below that target.
The 2017 tax cuts boosted the economy before the pandemic and should continue, say Republicans.
And while none of the GOP presidential candidates, including Trump, have outlined their tax plans, the former president will want to make his tax law permanent, said Moore.
Kevin Hassett, the former chief White House economist under Trump, commented that extending the tax cuts, including immediate deductions on capital expenses, will bring growth, while extending tax cuts would have a lesser effect.
But Republicans are also fighting over a provision to limit deductions for state and local taxes, while also disagreeing over whether Biden's tax breaks for clean energy should be repealed.
Meanwhile, Democrats are saying that the 2017 tax bill brought unfair benefits for high-income households while not boosting the economy.
Biden's plan to extend the tax cuts for households bringing in less than $400,000 would affect 98% of Americans while costing about two-thirds of what a full extension would. Biden has not said how he will pay to continue those tax cuts.
Meanwhile, Biden's plans call for the corporate tax rate to go to 28% from 21%, with the top individual rate going to 39.6% from 37%. Many business owners would also face new taxes in addition to the hikes.
That plan would bring in more than $2 trillion, and about $6 trillion more than a full extension of the 2017 tax law.
However, Democrat opposition might make the plan hard to pull off. In 2021 and 2022, when they controlled the House and Senate, Democrats enacted many Biden tax policies, including a new minimum tax on corporations and clean-energy tax breaks but fell short after opposition from Sens. Joe Manchin, D-W.Va., and Kyrsten Sinema, I-Ariz. Manchin is retiring at the end of his term and Sinema is being challenged by a Democrat for her Senate seat.
Kimberly Clausing, a former Treasury official for Biden, said that if Democrats can hold a majority, they would likely be more progressive where taxes are concerned than when they held the majority in 2021.
But if government control is divided, lawmakers could find themselves making compromises like they did in 2012, after President Barack Obama was reelected. His then-vice president, Biden, brokered a deal that extended tax cuts benefitting more high-income people than Obama proposed in his tax plan.
Sandy Fitzgerald ✉
Sandy Fitzgerald has more than three decades in journalism and serves as a general assignment writer for Newsmax covering news, media, and politics.
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