Yahoo Finance Trump-Era Tax Cuts Set To Expire: Here’s What Will Happen if Trump Wins the Election
In his first presidential administration, Donald Trump enacted the Trump Tax Cuts and Job Acts (TCJA) in 2017, a move many saw as a massive overhaul of the tax system. These changes are set to expire in 2025 and with the presidential election a few months away, could have enormous ramifications for consumers, depending on who is elected.
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As part of his campaign platform, Trump has repeatedly asserted he would make the Trump Tax Cuts and Jobs Act permanent — including increasing the standard deduction, lowering corporate and estate tax rates and increasing the child tax credit.
Critics of the Act argue that it mostly benefits the wealthy.
For instance, according to The Tax Policy Center, “half the benefits of extending the TCJA would go to those making $450,000 or more.”
Addressing the looming expiration of the Act, Senator Sheldon Whitehouse (D-RI) deemed them a “tax scam cutting taxes for billionaires and big corporations.”
“The Trump tax cuts were a gift to the ultrarich and a rotten deal for American families and small businesses,” he said in a statement. “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.”
Proponents of the changes and of their extension argue that extending them would bolster economic growth and help all Americans, including middle-class families.
A “Huge Help to Consumers”
According to Thomas Savidge, economist with the American Institute for Economic Research, extending the TCJA would be a “huge help to consumers.”
Savidge argued that the lower income tax rates allow consumers to keep more of what they earn, which is especially important when inflation over the past four years has severely eroded the purchasing power of their dollar.
“With a new presidential administration, the TCJA may not change much,” said Savidge, adding, however, that Trump has discussed replacing income taxes with tariffs — requiring a massive overhaul of the tax code, as GOBankingRates previously reported.
The big changes, he said, would occur if President Biden wins and allows the TCJA to expire in 2025. “This would result in higher taxes for all income earners.”
Demian Brady, Vice President of Research for the National Taxpayers Union Foundation, believes an extension would be beneficial for the economy, noting that new estimates by the Congressional Budget Office (CBO) shows that extending the TCJA would decrease revenues by $4 trillion.
“Another way of looking at that same estimate is that letting the TCJA expire would result in a $4 trillion tax hike, hitting consumers and businesses who are already reeling from years of inflationary pressures,” Brady stated.
Finally, other experts also argued that additional ways an extension could be beneficial, is that an extended child tax credit would benefit working families by reducing their tax burden and potentially increasing refunds.
“In turn, this will give families more disposable income,” said Karla Dennis, Founder and CEO at Karla Dennis & Associate. “A Trump win will give us continued lower tax rates both individually and on the corporate side,” she added, noting that this would help Americans across all income brackets.
High-Income Households “Will Benefit Far More”
On the other hand, Brendan Duke, Senior Director for Economic Policy for the Center for American Progress (and former White House National Economic Council advisor), argued that high-income households will be the ones benefiting from extending the Trump tax cuts.
“The average tax cut for a middle-income household is just $1,000 while the tax cut for the top 0.1% — 130,000 households making over $4.8 million annually — is $340,000 according to the Tax Policy Center,” said Duke. “Middle-income households will struggle under the weight of taxes on imported goods and higher interest rates since, unlike high-income households, the tax cuts are not large enough to offset those costs.”
In addition, Duke also said that he disagreed with the premise that Biden wouldn’t extend many of the tax cuts.
“He has been crystal clear and emphatic that he would not raise taxes on households making under $400,000 and would extend the expiring parts of the Trump tax law for households making under $400,000,” added Duke.
Extension Could Bolster Economic Growth — Specifically with the Opportunity Zone Program
Ashley Tison, Esq., Founder of OZPros, noted that one potential advantage of the expiration would be an increase federal revenue, leading to better-funded public services and infrastructure improvements.
On the other hand, a continuation would aim to bolster economic growth by keeping more money in the hands of consumers and businesses.
Tison specifically referred to the Opportunity Zone program, created as part of the TCJA, which he said has spurred economic development in underserved communities and saved “massive amounts of capital gains taxes for investors.”
Opportunity zones “provide several tax benefits to those who invest in these areas, including a temporary deferral of capital gains taxation if gains are reinvested in a qualified opportunity fund,” according to the Congressional Research Office.
“The Opportunity Zone program was highlighted by President Trump in the debate as a cornerstone of how his administration is focused on helping minorities,” said Tison.
He added that by offering significant tax incentives for investments in these zones, the program encourages capital flow into areas that need it most, spurring job creation and infrastructure improvements.
“If the TCJA is extended — or even just key components are extended, the Opportunity Zone program would likely continue to play a critical role in fostering development in economically distressed areas, contributing to a more balanced economic growth across the country,” he said. “However, the extension of these cuts could only continue to add to the national deficit if not paired with significant spending cuts.”
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This article originally appeared on GOBankingRates.com: Trump-Era Tax Cuts Set To Expire: Here’s What Will Happen if Trump Wins the Election
