The upcoming expiration of nearly $4 trillion in tax cuts poses a serious challenge for the winner of November’s presidential election, a topic that the Biden White House is keen on highlighting in the lead-up to the elections.
Lael Brainard, director of the White House National Economic Council, stressed the administration’s divergence from Republicans on tax policies in a speech at the Brookings Institution. She advocated for higher taxes on corporations and the ultra-wealthy to support the middle class, emphasizing President Biden’s commitment not to raise taxes on individuals earning less than $400,000.
The expiration of the 2017 tax package signed by former President Trump looms large, with many of its provisions set to sunset after 2025. If left to expire, most U.S. households would see their tax burdens increase. Conversely, extending all the tax cuts would add an additional $4.6 trillion to the national debt over the next decade, according to the Congressional Budget Office.
Brainard argued that the 2017 tax cuts failed to deliver the promised economic growth and highlighted the disparities in the tax code that benefited wealthy households. She reiterated the administration’s commitment to tax fairness, framing it as a central issue in the upcoming elections.
Joe Biden
Trump has vehemently opposed any tax increases, arguing that they would harm the economy. He maintains that economic growth stems from choices made by corporate and wealthy investors, while Biden believes in stimulating growth through middle-class spending and saving.
The Tax Policy Center’s initial estimates suggested that while middle-income families would see modest savings under Trump’s tax cuts, the wealthiest Americans stood to benefit remarkably more. Despite Biden’s assurance that he only seeks higher taxes on the wealthy and corporations, Trump has portrayed his opponent as planning to raise taxes across the board.
The debate over tax policy underscores broader ideological differences between the two parties. Trump contends that Biden’s policies would exacerbate inflation and lead to job losses, while Biden argues for a more balanced approach to taxation and spending.
However, both approaches have their economic implications. Extending all of Trump’s tax cuts would add outstandingly to budget deficits, while Biden’s plans to reduce the deficit remain somewhat uncertain.
Republicans may also face challenges in extending the tax cuts without worsening the government’s financial position. The need for spending cuts to offset increased debt could further complicate the debate over tax policy.
As the election approaches, the issue of tax policy is likely to remain a focal point, with both parties offering contrasting visions for the country’s economic future.
