Yahoo Finance Ex-Trump Officials’ Project 2025: 5 Ways It Could Affect Your Taxes
Amid a presidential election cycle full of highly charged and astonishing events, a conservative political agenda spearheaded by The Heritage Foundation is quickly gaining steam in conversations and triggering numerous debates. If implemented, this political agenda could have enormous ramifications for a slew of consumer issues, including taxes.
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The Project 2025 Presidential Transition Project is a 920-page roadmap “building now for a conservative victory through policy, personnel and training.”
“The project will build on four pillars that will, collectively, pave the way for an effective conservative Administration,” according to its website. These include: a policy agenda, presidential personnel database, presidential administration academy and a playbook for the first 180 days of the next administration.
While former president and Republican nominee Donald Trump has tried to distance himself from this plan, saying on his Truth Social social media platform that “I know nothing about Project 2025. I have no idea who is behind it.”
Yet, as CNN reported, “six of his former Cabinet secretaries helped write or collaborated on the 900-page playbook,” including his first deputy chief of staff, to whom about 20 pages are credited.
“At least 140 people who worked in the Trump administration had a hand in Project 2025.”
GOBankingRates reached out to The Heritage Foundation officials, who declined to comment.
As for President Joe Biden’s camp — the administration dedicated a page on its campaign website to denounce what it deems an “extreme” project that “dives into almost every aspect of Americans’ daily life.”
The administration’s website added that the plan would trigger “more tax handouts to the ultra-wealthy, while raising your taxes, terminating your healthcare and cutting Social Security.”
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How Would Project 2025 Impact Taxes?
The project would make a number of changes affecting how individuals and businesses are taxed.
Simplify Taxes
First, it aims to simplify taxes. To that end, it would enact a “simple two-rate individual tax system of 15% and 30% that eliminates most deductions, credits and exclusions.”
The 30% bracket “should begin at or near the Social Security wage base to ensure the combined income and payroll tax structure acts as a nearly flat tax on wage income beyond the standard deduction,” according to the document.
As CBS News reported, the 15% flat tax would be for individuals earning up to about $168,000, while the 30% income tax bracket would apply to people earning more than that.
In contrast, for 2024, the IRS has seven tax brackets, each with its own rate: 37%, 35%, 32%, 24%, 22%, 12% and 10%. Which bracket you’re in, and thus which rate you pay, depends on income thresholds and whether you are part of a married couple filing jointly.
Josh Thompson, founder and CEO, Impact Health USA, is a strong supporter of these policies, which he deemed “a visionary approach to tax reform that promises to revitalize the American economy.” He said that simplifying the tax code is a “game-changer.”
“By making tax filing more straightforward, we reduce the burden on individuals and businesses alike,” said Thomspon. “This not only cuts down on compliance costs but also encourages entrepreneurship and investment. A simpler tax system means fewer headaches and more focus on growth and innovation.”
On the other hand, Brendan Duke, senior director for economic policy at the Center for American Progress, said on X (formerly Twitter) that with these changes, a family making $100,000 would get a $2,600 increase, while a family making $5 million would get a $325,000 tax cut.
Duke told CBS News that the Project 2025 proposal “is a dramatic reform of how we fund our government, where we ask the wealthy to pitch in more than lower income families,” adding that “this shifts taxes from the wealthy to the middle class, full stop.”
Patrick Gruhn, former Europe head of FTX and founder of Perpetuals.com, has a more nuanced view about it. He argued that, based on experiences in other countries with proposals like Project 2025 that aim to simplify the tax system, they ultimately lead to economic growth and more prosperity, especially for low-income and middle-class consumers.
“However, any change of the tax system, especially if as ambitious as Project 2025, will also lead to some negative consequences in terms of a higher tax burden, which hopefully ultimately will be superseded by the overall growth from the change,” he added.
Eliminate Deductions and Credits
The simplified tax code would also eliminate “most deductions, credits and exclusions.”
According to Impact Health USA’s Thomspon, this would “ensure a fairer system where everyone pays their share without relying on complex loopholes.”
“It’s a move toward transparency and fairness, aligning with conservative values of equality and simplicity,” he added.
Yet, Duke told CBS that if the Child Tax Credit were eliminated, for instance, families falling in the 15% tax bracket “would pay an additional $6,600 compared with today’s tax system.”
Reduce Corporate Income Tax Rate
The corporate tax rate would be reduced to 18% from the current 21%, according to the document. The Tax Cuts and Jobs Act (TCJA) — signed into law by Trump in 2017 — has already decreased it to 21% from 35%, according to the Tax Policy Center.
“The corporate income tax is the most damaging tax in the U.S. tax system, and its primary economic burden falls on workers because capital is more mobile than labor,” according to Project 2025.
According to Thompson, lowering corporate tax rates will make the U.S. more competitive on the global stage.
“This policy will attract businesses back to our shores, creating jobs and boosting local economies,” he said. “The benefits of a robust corporate sector will trickle down, improving wages and opportunities for American workers.”
Change Inflation Reduction Act-Related Taxes and Credits
The roadmap calls for Inflation Reduction Act-related taxes and credits to be repealed, including the book minimum tax, the stock buyback excise tax, the coal excise tax, the reinstated Superfund tax and excise taxes on drug manufacturers.
In addition, “the next administration should also push for legislation to fully repeal recently passed subsidies in the tax code, including the dozens of credits and tax breaks for green energy companies in Subtitle D of the Inflation Reduction Act,” according to the document.
Implement Flat Capital Gains Tax
Under the plan, capital gains — “the tax you may have to pay on the profits of investments you’ve sold in the current tax year,” according to Fidelity — would be taxed at 15%. Under the current tax code, the top rate is 20%, but investors with modest incomes pay 0% to 15%.
Some of the concerns associated with this proposal include the fact that “lower capital gains rates disproportionately benefit the wealthy and that cutting capital gains tax rates can lead to a loss of government revenue,” according to Kiplinger.
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This article originally appeared on GOBankingRates.com: Ex-Trump Officials’ Project 2025: 5 Ways It Could Affect Your Taxes
