As we look ahead to the 2024 presidential election, the conversation around tax breaks and the federal budget deficit is heating up once again. With presumptive nominees President Joe Biden and former President Donald Trump both pledging to extend expiring tax breaks for most Americans, the question arises – how will these tax breaks be funded?
At Extreme Investor Network, we strive to provide our readers with valuable insights and unique perspectives on personal finance topics. The trillions in tax breaks enacted by Trump via the Tax Cuts and Jobs Act of 2017 are set to expire after 2025 without action from Congress. This could potentially increase taxes for over 60% of filers, according to the Tax Foundation.
One of the major challenges as we approach the 2025 tax cliff is the federal budget deficit. Erica York, senior economist and research manager at the Tax Foundation’s Center for Federal Tax Policy, highlights this as a “huge sticking point.” Fully extending the TCJA provisions could add an estimated $4.6 trillion to the deficit over the next decade, according to the Congressional Budget Office.
It’s important to note that the cost of extending major parts of the TCJA has grown by about 50% since initial estimates in 2018. While some may argue that economic growth from the TCJA would cover a portion of the cost, studies have shown that the effects were smaller than anticipated.
As we consider the proposals from Biden and Trump, it becomes clear that there are differing approaches to addressing the issue. Biden plans to extend tax breaks for taxpayers making less than $400,000, while Trump aims to extend all TCJA provisions. Biden’s economic advisor, Lael Brainard, has suggested higher taxes on the ultra-wealthy and corporations to fund TCJA extensions for middle-class Americans. On the other hand, Trump has expressed support for tariffs on imported goods.
However, the uncertainty around these policy proposals remains, especially without clarity on which party will control the White House and Congress. At Extreme Investor Network, we will continue to monitor these developments and provide our readers with expert analysis and actionable insights on how they can navigate these changes in the personal finance landscape. Stay tuned for more updates and information on how you can make informed financial decisions in these uncertain times.