by Casey Harper
The sweeping tax cuts enacted under Trump in the 2017 Tax Cuts and Jobs Act are set to expire next year, making the tax debate a potentially key political issue this election year.
While illegal immigration and inflation are top concerns for Americans, both sides are increasingly talking about the Trump-era tax cuts, which President Joe Biden has said will let them expire next year.
Meanwhile, President Donald Trump has promised further tax cuts if elected.
“You’re all going to get the biggest tax cuts as we roll out additional cuts and a whole new Trump economic boom like you’ve never seen before,” Trump told supporters at a rally in South Carolina in February.
As Central Square previously reportedthe issue came to a head last week when the CBO released a report that estimated that extending the Trump tax cuts would augment the national debt by $4 trillion over the next decade.
The expiring provisions include a much larger child tax credit, death tax exemptions for farmers and lower taxes for miniature businesses.
The White House said Americans paying more than $400,000 would not pay higher taxes, but an independent tax analysis disputed that claim.
“Without action by Congress, most taxpayers will see a noticeable tax increase in 2026 compared to current policies,” the Tax Foundation said in its report. analysis.
Critics of the Trump-era tax cuts have pointed to CBO costs and argued that the cuts disproportionately benefit the wealthy.
The Central Bureau of Investigation analysis provided some cover for Biden as the national debt nears $35 trillion.
Supporters of tax cuts argue that Americans who are already struggling with increased inflation and gas prices will pay more.
“President Biden has said that if re-elected, he will let the Trump tax cuts expire,” Preston Brashers, an economist at the Heritage Foundation, told The Center Square. “Not only would it break his pledge not to raise taxes on Americans making less than $400,000, it would undo it. If Biden allows Trump’s tax cuts to expire, Americans earning less than $400,000 would be hit with a tax augment of more than $2 trillion over 10 years.
“You can argue about the exact size of the tax increase, but there’s no denying that the expiration of the Trump tax cuts will hit the middle class,” he added.
House Ways and Means Committee Chairman Jason Smith, R-MO. and House Budget Committee Chairman Jodey Arrington, R-Texas, issued a statement defending the tax cuts that took effect in 2017 after Trump took office.
Conservative economists tend to argue that when more money ends up in the hands of private citizens, it is used to create more wealth and jobs, while money that ends up in the hands of government does not lead to the same level of wealth creation and growth, often lost to bureaucracy, waste, and bad spending choices.
Lawmakers said the economic growth from the tax cuts outweighed the additional costs. Over time, greater economic growth significantly increases the amount of taxable income for the government as well.
“The truth is that Trump’s tax cuts resulted in economic growth a full percentage point above CBO’s forecast, and federal revenues far exceeded the agency’s projections,” the lawmakers said. “In fact, under Trump’s tax policies, tax revenues reached a record high of nearly $5 trillion in 2022, with revenues averaging $205 billion above CBO projections four years after the law went into effect.”
Economic analysis by the Tax Foundation helps strengthen the economic growth argument.
“The Tax Foundation estimates that making the TCJA permanent would create approximately 904,000 full-time jobs, ranging from more than 136,000 in California and 75,000 in Texas to approximately 1,660 new jobs in Vermont,” the group said in its analysis.
CBO debt statistics are a challenging blow to Republicans who are fighting to extend tax cuts. But they pointed to other key statistics that were left out of the criticism of the Trump-era tax cuts.
“Officially reported poverty levels have fallen to their lowest levels in 50 years, and unemployment rates among minorities and those without college degrees have reached historic lows,” lawmakers said. “Real median household income increased by $5,000 and wages increased by almost 5 percent. Americans earning less than $100,000 saw an average tax cut of 16 percent. And while the tax burden on low-income families has declined, the top percent has seen its share of federal taxes increase.”
If the cuts expire, costs to American taxpayers will augment.
“On the other hand, President Biden’s promise to sunset the Trump tax cuts means that a family of four earning $75,000 today will owe Uncle Sam an additional $1,500 in taxes,” the lawmakers said. “ Child tax credit will be cut in half; tax rates for small businesses will reach the top 40 percent; and farmers may have to consider selling the family business to pay rising death taxes.”
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Casey Harper is a Washington bureau reporter Central Square.
Photo “Donald Trump” by Dana Scavino.
