Director of the National Economic Council Lael Brainard addressed the nation from the White House on January 11, 2024, unveiling President Joe Biden’s plans to tackle the impending expiration of tax breaks introduced by former President Donald Trump. The Tax Cuts and Jobs Act (TCJA) of 2017, which brought significant changes to the tax landscape, is set to see several provisions expire after 2025 unless Congress intervenes. According to the Tax Foundation, this could result in higher taxes for over 60% of filers.
Understanding the Implications
Among the expiring provisions are lower federal income tax brackets, a higher standard deduction, an enhanced child tax credit, and a doubled estate and gift tax exemption. “President Biden plans to extend tax cuts for hardworking Americans by making sure the wealthiest and big corporations pay their fair share,” Brainard emphasized during a press call. The Biden administration aims to uphold “key principles” to support middle-class and working families as the 2025 tax cliff looms.
Brainard reiterated Biden’s commitment to extending tax breaks for those earning less than $400,000 while allowing TCJA provisions to expire for those making more. This approach is part of Biden’s broader strategy to raise revenue for his “commitment to seniors and fiscal responsibility.” In contrast, former President Trump has expressed his intent to extend all expiring TCJA provisions if reelected, though he has not detailed specific funding plans for these extensions.
Fully extending TCJA provisions could add an estimated $4.6 trillion to the deficit over the next decade, according to the Congressional Budget Office. While Trump has suggested tariffs on imported goods as a potential revenue source, his campaign National Press Secretary Karoline Leavitt stated that Trump would “advocate for more tax cuts for all Americans.”
Corporate Tax Rates and IRS Funding
The TCJA permanently reduced the top federal corporate tax rate from 35% to 21%. However, Biden’s plan includes raising corporate taxes and implementing a global minimum tax. Brainard also highlighted the need for sustained IRS funding, which has faced opposition from Republicans since Congress approved nearly $80 billion via the Inflation Reduction Act.
As the debate over tax policy continues, both sides present starkly different visions for America’s fiscal future. With significant economic implications at stake, the coming years will be crucial in shaping the nation’s financial landscape.
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