The 2024 Presidential election is gearing up, and one issue promising heated debate is tax policy. With the Tax Cuts and Jobs Act (TCJA) set to expire in 2025, the national debt ballooning, and the global tax landscape shifting, the next President will face monumental tax decisions. Let’s delve into the key tax issues likely to dominate the campaign and impact American lives for years to come.
TCJA Expirations: A Looming Tax Cliff
The TCJA, enacted in 2017, significantly altered individual and business tax structures. However, many of its provisions are temporary, setting off a “tax cliff” at the end of 2025. Candidates must address how they plan to mitigate the impact of these expiring provisions on all income levels.
Individual Tax Expirations: Brackets, Credits, and Deductions
- Tax Rates and Brackets: The TCJA lowered individual tax rates and widened brackets, saving many Americans money. Will these changes be permanent? How will candidates address the potential return to higher rates and narrower brackets?
- Family Benefits: The TCJA expanded the Child Tax Credit, personal and dependent exemptions, and the standard deduction, benefitting lower- and middle-income families. Will these enhancements be preserved, and how will candidates address potential changes that could leave families worse off?
- Itemized Deductions: The TCJA limited itemized deductions for home mortgage interest and state and local taxes while doubling the standard deduction. Will these limitations remain? How will candidates address the potential return to a more complex tax code for millions of taxpayers?
Business Tax Expirations: R&D, Depreciation, and Beyond
- Research and Development: The TCJA’s temporary change to R&D expense deduction has raised concerns about discouraging innovation. Will candidates support making this change permanent? How will they address the bipartisan efforts to introduce new R&D tax credits?
- Machinery and Equipment: Bonus depreciation, which allowed businesses to immediately deduct the cost of certain equipment, is also set to expire. Will candidates consider extending this provision to encourage investment in infrastructure?
Beyond the TCJA: A Complex Tax Landscape
- Global Tax Agreement: The recent 138-nation Global Tax Agreement introduces new rules for international taxation. How will candidates navigate this complex agreement and its potential impact on American businesses and taxpayers?
- Trade and Tariffs: International trade policies significantly impact import taxes. How will candidates approach trade agreements and tariffs, considering their potential influence on tax revenue and economic growth?
- Industrial Policy: The resurgence of industrial policy discussions raises questions about potential tax breaks for certain industries. How will candidates balance these incentives with concerns about fairness and fiscal responsibility?
- Federal Budget and Debt: The unsustainable federal budget trajectory and rising debt levels demand attention. How will candidates propose to address these challenges, and what role will tax policy play in their solutions?
Your Vote, Your Tax Future
The 2024 election offers a critical opportunity to shape the future of American tax policy. Before casting your vote, understand each candidate’s tax proposals and their potential impact on your finances and the broader economy. Engage in informed discussions, ask questions, and hold candidates accountable for their tax visions. Remember, the tax decisions made in 2024 will have lasting consequences for years to come.