This Thursday in Atlanta, President Joe Biden and former President Donald Trump will face off for the first debate of the 2024 presidential election. One topic that should take center stage is the future of the US tax code. The next occupant of the White House will have to address the expiring individual and business tax changes in the Tax Cuts and Jobs Act (TCJA). The next president will also have to tackle massive debt and deficit levels and an ongoing trade war with China.
Both candidates should provide clear and honest answers about their plans (or lack thereof) to address the nation’s urgent tax policy issues. The expirations are the result of temporary changes made by the TCJA that overhauled the taxes individuals pay, boosting after-tax income across all income groups on average. Some of the major provisions set to expire at the end of next year include lower tax rates and brackets, expanded family benefits, limits on itemized deductions, and other changes.
Trump has discussed extending the entire TCJA, as well as eliminating the individual income tax in favor of higher taxes on American purchases from abroad. Biden has discussed extending the TCJA for people earning under $400,000 and offsetting the cost with higher taxes on US businesses and high-income taxpayers. Neither have provided a detailed plan for addressing the expirations.
Outside of the scheduled changes to individual income taxes, businesses also face instability in their taxes due to scheduled changes. These include changes to research and development, machinery and equipment, net interest limitation, and international provisions. Trump has discussed continuing all the 2017 TCJA policies, but Biden has not specified how, if at all, he would address bonus depreciation or R&D amortization.
Former President Trump instigated a trade war by imposing new tariffs on imports of washing machines and solar panels, steel and aluminum, and billions of dollars’ worth of consumer, intermediate, and capital goods from China throughout 2018 and 2019. President Biden has retained nearly all the tariffs save for narrow suspensions and quota replacements and has even issued a report recommending the continuation of all the Section 301 tariffs on China with further rate increases on select goods.
As the debate unfolds, it is crucial for taxpayers to stay informed about these potential changes and their implications. The future of the US tax code will significantly impact the financial decisions of individuals and businesses alike. Stay tuned for more updates and analysis on this topic.