President Joe Biden’s top economic advisor on Friday, May 10, laid out plans for the country’s looming debate over trillions in expiring tax breaks enacted by former President Donald Trump.
Several provisions from the Tax Cuts and Jobs Act, or TCJA, of 2017 will expire after 2025 without any changes from Congress. Those include lower federal income tax brackets, a higher standard deduction and doubled estate and gift tax exemption, among others.
The Republicans’ signature tax package also permanently reduced corporate taxes by dropping the top federal rate from 35% to 21%.
“It’s clear we need to end the 2017 tax breaks for the ultra-wealthy and scale back costly permanent corporate tax breaks,” White House national economic advisor Lael Brainard said May 10 during a speech to The Hamilton Project at the Brookings Institution.
The multitrillion dollar tax battle comes amid the ongoing debate over the national debt, and extending the TCJA tax breaks would boost the budget deficit, according to the Congressional Budget Office.
Trump and other Republicans have pushed for a full extension of expiring TCJA tax breaks, which could add an estimated $4.6 trillion to the deficit over the next decade, according to a Congressional Budget Office report released this week.
‘The stakes could not be higher’ for tax breaks debate
“As we approach the tax debate next year, the stakes could not be higher for the fairness of our tax system and our nation’s fiscal future,” Brainard said.
Renewing Biden’s pledge for “tax fairness,” she said the administration aims to extend expiring TCJA provisions for middle-class Americans. Those extensions would be funded by raising taxes on the ultra-wealthy and corporations.
Brainard said the original legislation primarily benefited the wealthiest Americans and “the trickle-down never happened.”
“Achieving a fairer tax system also means we can’t extend expiring Trump tax cuts for those with incomes above $400,000,” she added.
The administration also wants to quadruple the tax on stock buybacks and add a 25% minimum income tax for billionaires, Brainard said.
Meanwhile, House Republicans have assembled teams to study and propose solutions to address the upcoming 2025 tax cliff.
“If the 2017 Trump tax cuts expire an average family of four earning $75,000 would see their taxes increase by $1,500 a year,” House Ways and Means Committee Chairman Jason Smith, R-Mo., said in an April press release.
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