As the 2024 elections draw near, a significant point of contention has emerged between President Joe Biden and his Republican rival, Donald Trump. The issue at hand? The future of tax cuts for the wealthy in the United States. (source)
Major components of the 2017 Trump tax cuts are set to expire at the end of 2025. This impending expiration has divided the two parties, with Democrats rallying behind a push to raise taxes on upper earners, while Republicans are advocating to keep the tax breaks. If these tax cuts are maintained, they would add an estimated $3.3 trillion to the national debt over the next decade, according to the nonpartisan Congressional Budget Office.
Biden has pledged to end the Trump tax breaks for incomes above $400,000, while promising not to raise taxes for those earning less. He has been vocal in his criticism of Trump’s upper-income tax breaks, stating that if he is re-elected, these tax cuts will remain expired. His plan includes raising the corporate tax from 21% to 28%, imposing a 25% minimum income tax on billionaires, increasing the marginal tax rates on the highest incomes from 37% to 39.6%, and boosting taxes on capital gains for high earners.
On the other hand, Trump is promising even deeper tax cuts if he returns to the White House. However, his plan lacks specificity and does not address the rising national debt. He has been promoting a different idea that he didn’t pursue during his presidency: ending taxes on tips.
The outcome of this tax cut debate will be determined by the winners of the White House and Congress. It’s a high-stakes issue that will significantly impact the financial landscape of the country and the tax obligations of its citizens. As responsible financial citizens, it’s crucial to stay informed about these developments and understand their potential implications.