A political showdown is expected next year when former President Donald Trump's signature 2017 tax law lapses, and the 2024 presidential election will play a decisive role in how that agenda plays out, The Wall Street Journal reported.
The Tax Cuts and Jobs Act brought a major overhaul to U.S. tax code: The corporate tax rate was slashed to 21% from 35%, individual income tax rates were cut, and the standard deduction was increased.
Many of the household tax reforms included in the bill expire in 2025. If all the tax cuts expire, the vast majority of U.S. households would see their payments to the IRS increase. But if all the tax cuts are extended, as additional $4.6 trillion, including the cost of debt service, would be added to the national debt over the next decade, according to the Congressional Budget Office.
"Tax policy will be front and center on the 2025 agenda because the system will undergo an earthquake even if Congress does nothing," said Sen. Elizabeth Warren, D-Mass. "We must have our own agenda, and we will."
Lael Brainard, director of the White House National Economic Council, in a speech last month emphasized the Biden administration's differences with Republicans over taxes. In her address at the Brookings Institution, Brainard made a case for higher rates on corporations and the ultrawealthy in order to support the middle class.
"The expiration of Trump's 2017 tax package next year will put tax fairness front and center," Brainard said. "The president is honoring his ironclad commitment to not raise taxes on anyone making less than $400,000 and will cut taxes further for workers and families, paid for by asking corporations and those at the top to contribute more."
Trump, a Republican, said tax increases would destroy the U.S. economy. President Joe Biden, a Democrat, wants to extend the middle-class tax cuts while raising taxes on highly profitable companies and the richest Americans.
Rep. Jason Smith, R-Mo., said Biden will "be responsible for decimating middle America and small businesses with a mountain of new taxes" if he allows the tax cuts to expire.
Smith, with House Budget Committee Chair Jodey Arrington, R-Texas, last month said the cuts "resulted in economic growth that was a full percentage point above CBO's forecast, and federal revenues far outpaced the agency's predictions."
"In fact, under Trump tax policies in 2022, tax revenues reached a record high of nearly $5 trillion, and revenues averaged $205 billion above CBO predictions for the four years following implementation of the law," they added.
Senate Budget Committee Chair Sheldon Whitehouse, D-R.I., last month called the Trump tax cuts "a gift to the ultrarich and a rotten deal for American families and small businesses."
"With their impending expiration, we have a chance to undo the damage, fix our corrupted tax code, and have big corporations and the ultra-wealthy begin to pay their fair share," Whitehouse said.
Information from The Associated Press was used in this report.
Solange Reyner ✉
Solange Reyner is a writer and editor for Newsmax. She has more than 15 years in the journalism industry reporting and covering news, sports and politics.
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