What's going to happen to the Trump tax cuts?
Digest
The 2017 Tax Cuts and Jobs Act, which included tax cuts for businesses and individuals, is set to expire next year, leading to a major debate over tax policy. The act lowered the corporate tax rate from 35% to 21% and gave businesses the ability to write off new investments. For individuals, it adjusted tax brackets, increased the child tax credit, and included provisions beneficial to wealthy taxpayers. While the act did increase business investment by around 10%, it had a modest impact on wages and significantly reduced government revenue. The Congressional Budget Office estimates that extending the tax cuts would add $4.6 trillion to the deficit over the next decade. Republicans, including Donald Trump, support renewing the tax cuts, while Democrats, including President Biden, favor maintaining or expanding them for those making less than $400,000 a year while raising taxes on the wealthiest Americans and corporations. Experts from both conservative and progressive think tanks agree that the child tax credit should be maintained, highlighting potential common ground in the upcoming debate.
Outlines
Introduction
This Chapter introduces the topic of taxes and the upcoming debate over tax policy, highlighting the significance of the 2017 Tax Cuts and Jobs Act and its impending expiration. It emphasizes the role of voters in shaping the future of tax policy by choosing teams that will determine who pays for the government and how much for years to come.
The 2017 Tax Cuts and Jobs Act: A Review
This Chapter delves into the details of the 2017 Tax Cuts and Jobs Act, outlining its key provisions for both businesses and individuals. It discusses the impact of the act on corporate tax rates, business investment, individual tax brackets, the child tax credit, and provisions benefiting wealthy taxpayers. It also explores the act's effectiveness in stimulating economic growth and investment, analyzing its impact on wages and government revenue.
The Upcoming Tax Policy Debate
This Chapter focuses on the upcoming debate over tax policy, highlighting the significance of the expiring tax cuts from the 2017 Tax Cuts and Jobs Act. It discusses the contrasting positions of Republicans and Democrats on extending or modifying the tax cuts, emphasizing the role of voters in shaping the outcome. It also explores the potential economic consequences of extending the tax cuts, including the impact on the federal deficit.
Potential Common Ground
This Chapter highlights potential areas of agreement in the upcoming tax policy debate, focusing on the child tax credit. It emphasizes the shared support for maintaining the child tax credit among experts from both conservative and progressive think tanks, suggesting a possible point of consensus in the debate.
Keywords
Tax Cuts and Jobs Act
The Tax Cuts and Jobs Act of 2017 was a major piece of legislation that significantly altered the U.S. tax code. It included provisions for both businesses and individuals, aiming to stimulate economic growth and investment. The act lowered the corporate tax rate, provided tax breaks for businesses, adjusted individual tax brackets, increased the child tax credit, and included provisions beneficial to wealthy taxpayers. The act's effectiveness in achieving its goals is a subject of ongoing debate.
Tax Policy
Tax policy refers to the government's approach to levying taxes on individuals and businesses. It encompasses the principles, rules, and regulations that govern the taxation system. Tax policy decisions have a significant impact on the economy, influencing investment, consumption, and income distribution. The debate over tax policy often centers on issues such as fairness, efficiency, and the role of government in the economy.
Corporate Tax Rate
The corporate tax rate is the percentage of a corporation's profits that is paid to the government in taxes. The corporate tax rate can influence a company's investment decisions, profitability, and competitiveness. Lowering the corporate tax rate is often seen as a way to stimulate business investment and economic growth. However, it can also lead to reduced government revenue and potentially exacerbate income inequality.
Child Tax Credit
The child tax credit is a tax break for families with children. It provides a tax deduction or a direct payment to families based on the number of children they have. The child tax credit is intended to help families with the costs of raising children and to reduce child poverty. The size and eligibility requirements of the child tax credit can vary depending on the specific tax laws in place.
Federal Deficit
The federal deficit is the difference between the amount of money the U.S. government spends and the amount of money it collects in revenue. A deficit occurs when spending exceeds revenue. The federal deficit can be influenced by factors such as government spending on programs, tax cuts, and economic conditions. A large and persistent deficit can lead to increased national debt, which can have negative consequences for the economy.
Donald Trump
Donald Trump is an American politician and businessman who served as the 45th president of the United States from 2017 to 2021. He is a controversial figure known for his outspoken views and business dealings. Trump's presidency was marked by significant political and social divisions, as well as a number of policy changes, including the Tax Cuts and Jobs Act of 2017.
Joe Biden
Joe Biden is an American politician who served as the 46th president of the United States from 2021 to 2025. He previously served as the 47th vice president under President Barack Obama from 2009 to 2017. Biden's presidency has been marked by a number of challenges, including the COVID-19 pandemic, the withdrawal of U.S. troops from Afghanistan, and the ongoing conflict in Ukraine.
Conservative Think Tank
A conservative think tank is a non-profit organization that conducts research and advocacy on issues related to conservatism. Conservative think tanks typically promote policies that emphasize limited government, free markets, individual liberty, and traditional values. Examples of conservative think tanks include the American Enterprise Institute, the Heritage Foundation, and the Cato Institute.
Progressive Think Tank
A progressive think tank is a non-profit organization that conducts research and advocacy on issues related to progressivism. Progressive think tanks typically promote policies that emphasize social justice, economic equality, environmental protection, and government intervention to address social problems. Examples of progressive think tanks include the Center for American Progress, the Center on Budget and Policy Priorities, and the Institute for Policy Studies.
Q&A
What are the key provisions of the 2017 Tax Cuts and Jobs Act?
The Tax Cuts and Jobs Act lowered the corporate tax rate from 35% to 21%, gave businesses the ability to write off new investments, adjusted individual tax brackets, increased the child tax credit, and included provisions beneficial to wealthy taxpayers.
What are the potential economic consequences of extending the tax cuts?
Extending the tax cuts would add $4.6 trillion to the deficit over the next decade, according to the Congressional Budget Office. This could lead to increased national debt and potentially negative consequences for the economy.
What are the contrasting positions of Republicans and Democrats on the tax cuts?
Republicans, including Donald Trump, support renewing the tax cuts, while Democrats, including President Biden, favor maintaining or expanding them for those making less than $400,000 a year while raising taxes on the wealthiest Americans and corporations.
What is the potential common ground in the upcoming tax policy debate?
Experts from both conservative and progressive think tanks agree that the child tax credit should be maintained, suggesting a possible point of consensus in the debate.
Show Notes
Voters this fall won't just be voting for a president—they'll essentially decide who pays for the government and how much for years to come.
Today on the show, we explain the battle lines forming in this tax code throwdown.
Related Episodes:
The Good, The Bad and The Tax Cuts
Happy Birthday, Tax Cuts!
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