Taxes are top of mind for many. See what the US presidential candidates stand on tax policy as we enter the final weeks before the election. Our Bill Cass compares their plans.
As we enter the weeks leading up the election, the future of tax policy is certainly one of the hot topics being discussed on the campaign trail. Considering the pending expiration of the Tax Cuts and Jobs Act (TCJA), there will be a sense of urgency post-election for lawmakers to debate the future of taxes on individuals as well as businesses.
Here are some thoughts on tax policy as we head toward election day.
- While we may see a change in party control in the House and Senate, the slim majorities in Congress we see now are likely to remain after the 2024 ballots are counted, barring any major trend changes in the remaining few weeks before the election. This will make it challenging for whoever is in the White House to pursue more aggressive tax changes since a small number of lawmakers in either the House or the Senate could derail efforts on advancing tax-related legislation.
- For example, in November 2022 the Democrat-controlled House narrowly passed the Biden administration’s “Build Back Better Act,” which included a number of tax increases. However, the legislation stalled in the Senate even though the Democrats held a (slight) majority. Certain tax proposals being floated currently, such as taxing unrealized capital gains for some taxpayers, would likely be difficult to advance in this political environment.
• There have been several tax-related proposals floated by both presidential candidates on the campaign trail that, in our view, are highly unlikely to gain traction. For example, removing taxes on servers’ tips or not taxing Social Security benefits. In the case of Social Security, given the program’s structural solvency issues, it’s more likely that we will see increased taxes on Social Security at some point in the future.
How candidates differ on tax issues
While many details are lacking, here’s a high-level look at some tax policy changes each candidate might pursue once in office.
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Notes: The Congressional Budget Office (CBO) estimates that the 10-year cost of extending the TCJA tax provisions will cost more than $4 trillion.
The 3.8% net investment income surtax applies to taxpayers with modified adjusted gross income higher than $200,000 ($250,000 for married couples filing a joint tax return)
For 2024, the lifetime exclusion for gifts and estates is $13,610,000. If this provision expires, the figure would decline to approximately $7 million beginning in 2026.
There is no assurance that any estimate, forecast or projection will be realized.
The future of taxes?
Regardless of how tax policy evolves following the election, certain taxpayers will want to prepare for higher taxes in the future, even if we see some short-term extension of the TCJA. Rising federal budget deficits, increasing interest costs of servicing the debt, and program solvency issues associated with Social Security and Medicare will create pressure on lawmakers to increase revenue. Currently, over 85% of federal government revenue is generated by income and payroll taxes on individuals and non-corporate businesses. In fact, corporate taxes only account for approximately 10% of federal government revenue.1 A plan to increase revenue would likely have a higher proportional impact on individual taxpayers and small businesses. Individuals will want to consult with a financial advisor and tax professional on potential strategies that may help hedge the risk of higher taxes in the future.
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Originally Posted October 9, 2024 – US elections: How the presidential candidates stand on taxes
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What about Trumps tariffs to solve everything, and picking companies of choosing like John Deere for a 200% tariff.
The guy is unpredictable at best!