There is considerable speculation surrounding the potential consequences of a Donald Trump presidency in 2024, particularly with regards to U.S. tax policy and the national debt. Many experts believe that if elected, Trump would be likely to implement another round of significant tax cuts, coming at a time when the current tax cuts implemented in the 2017 Tax Cut and Jobs Act are due to expire in 2025.
The possibility of a Republican majority in the House of Representatives, led by Speaker Mike Johnson and House Ways and Means Committee Chair Jason Smith, would provide ample opportunity to develop a "Tax Cuts and Jobs Act 2.0," according to Andrew Lokay, a senior research analyst at Beacon Policy Advisors.
However, it is projected that Democrats will gain control of the House in the upcoming elections, while potentially losing their hold on the Senate. Nevertheless, with a year left until Election Day, if Republicans manage to retain their majority in the House and regain control of both the White House and Senate, it would set the stage for a second wave of Trump tax cuts.
Lokay suggests that the earlier tax cut proposals put forth by House Republicans could serve as a starting point for negotiations on the successor to the TCJA. These proposals include raising the standard deduction—a widely used measure for reducing taxable income—and eliminating the estate tax.
It should be noted that implementing these potential tax measures would come at a high cost, and there has been little discussion regarding offsets to mitigate the impact. The Committee for a Responsible Federal Budget (CRFB), a nonpartisan watchdog organization, warns that extending the TCJA through 2035 would result in a cost of $3.4 trillion and raise U.S. debt to 129% of gross domestic product (GDP).
If certain expansions are combined with this extension, the estimated cost would skyrocket to $6.4 trillion, pushing the debt to 137% of GDP. These proposed expansions include the aforementioned Republican-supported measures targeting the standard deduction and estate tax, as well as a bipartisan initiative to address the SALT cap (a limit on deductions for state and local taxes) and a Democratic proposal for the child tax credit.
It remains to be seen what course U.S. tax policy will take in the future, particularly if Trump is reelected. The potential impacts on the national debt cannot be overlooked, as they have significant long-term implications for the country's financial stability and wellbeing.
Politicians Urged to Exercise Caution When Expanding Tax Cuts
The Committee for a Responsible Federal Budget (CRFB) has advised politicians to approach any expansion of the Tax Cuts and Jobs Act (TCJA) with caution. In a recent blog post, the CRFB emphasized the need for a comprehensive plan to fully finance any expansions and extensions. The organization further recommended that policymakers carefully consider which aspects of the TCJA should be extended, ensuring that any extensions are fully paid for in a way that generates sufficient revenue to meet the country's needs.
Trump's Proposal for Import Tariffs Faces Criticism
From 2018 Archive
A recent financial proposal from former President Donald Trump and his allies involved implementing a 10% tariff on all imports to the United States. However, this proposition has drawn sharp criticism. According to an estimate by the Tax Foundation, such tariffs would result in an annual tax hike of over $300 billion for American consumers.
Biden's Re-Election Campaign Shifts Focus
According to Beacon's Lokay, President Joe Biden's re-election campaign appears to be moving away from financial pitches. In light of the lackluster reception to the "Bidenomics" pitch, the campaign is now attempting a different approach. It aims to portray a potential return of Trump to the White House as a threat to U.S. democracy. This strategy is supported by The Economist magazine's cover story, which argues that a Trump presidency would have negative implications for the U.S. court system and the Department of Justice.
U.S. Stock Market Experiences Volatility
The U.S. stock market exhibited fluctuating trends on Friday, with the major indexes uncertain of their direction. Despite this uncertainty, these indexes are poised for their third consecutive week of gains. Positive sentiments are fueled by hopes for a smooth transition for the U.S. economy and expectations of interest-rate cuts in 2024.
Betting Markets Predict Higher Chances of Trump 2024 Victory
From September 2023 Archive
According to betting markets, the likelihood of a Trump victory in the 2024 elections is higher than that of a Biden victory. Furthermore, these markets also suggest that California Governor Gavin Newsom has better chances than Trump's GOP rivals.
Comparison between stock performance under Biden, Obama, and Trump
From August 2023
An analysis highlights that the stock market's performance under President Biden has been less favorable compared to both the Obama and Trump administrations.
Republican Presidential Candidates' Plans for Tackling Student Debt
Find out how the Republican presidential candidates intend to address the issue of student debt.
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