Trump and Harris Face Off Over the Expiring Tax Cuts Worth a Trillion Dollars
As a significant portion of Trump’s 2017 tax cuts is scheduled to lapse at the end of next year, presidential candidates are making their positions clear on the matter.
TroibNews 
The next president, whether Kamala Harris or Donald Trump, will encounter a significant early challenge related to a fundamental pocketbook issue: taxes.
A substantial portion of Trump's 2017 tax cuts is set to expire at the end of 2025, affecting basic tax rates for individuals and families. Both Trump and Harris are emphasizing this matter in their campaigns to attract voters.
Trillions of dollars are potentially on the line, and this situation will determine whether Democrats can take a proactive stance on an issue that has historically favored Republicans.
Trump has proposed not only extending the temporary provisions from his 2017 legislation but also introducing additional tax cuts, including the elimination of taxes on tips and Social Security income, and possibly reducing the corporate tax rate further.
On the other hand, Harris has adopted President Joe Biden’s platform of taxing the wealthy and has incorporated some of Trump’s concepts, such as ceasing the taxation of tips. She has also suggested significant expansions of the Child Tax Credit.
“I will fight to give money back to working- and middle-class Americans,” Harris stated in a speech in North Carolina on August 16 while outlining her economic strategy. “Compare my plan with what Donald Trump plans to do. He plans to give billionaires tax cuts year after year, and he plans to cut corporate taxes by over a trillion dollars.”
Trump has asserted that his 2017 legislation was the largest tax cut in history (a claim that tax experts have disputed) and argues that his tax reduction plan will lead to “tremendous growth,” which would aid in reducing the national debt.
Lawmakers have previously navigated the impending expiration of tax cuts, most recently in 2012 when cuts implemented by former President George W. Bush were set to sunset, alongside various other financial triggers. The upcoming deadline for next year pertains solely to taxes, but it remains a complex and high-stakes situation with many variables at play.
The expiring provisions primarily consist of income taxes that Republicans reduced across the board in 2017 for individuals and families. Other provisions that may disappear include an increased standard deduction, a doubled Child Tax Credit, and estate tax reductions for those transferring wealth to heirs.
While Trump seeks to maintain all these cuts, Harris supports raising taxes for individuals earning over $400,000, citing that wealthy Americans have not contributed their fair share and claiming that the 2017 cuts primarily benefited them. She has also signaled her support for increasing taxes on capital gains for high earners and tightening estate tax regulations.
Although the reduction in the corporate tax rate from 35 percent to 21 percent isn’t scheduled to expire, it still figures prominently in the debate. Harris, in line with Biden, aims to raise the rate to 28 percent, while Trump has suggested a potential cut to around 15 percent.
Historically, taxes have not been a strong point for Democrats, with Republicans establishing themselves as the party of tax cuts in the 1980s, leaving their opponents on the defensive.
However, Democrats feel encouraged by polling indicating the Trump tax cuts were never particularly popular and believe they can successfully focus on imposing higher taxes on high earners and corporations, an idea that has positive polling results.
“This is an issue where the broad, broad swath of the country is in agreement that more tax cuts to the rich and powerful is not where we want to go,” Rep. Pat Ryan (D-N.Y.) remarked.
Party leadership supports Harris for centering her initial major policy discussion on taxes, despite the acknowledgment that actual implementation may prove challenging, especially if Democrats do not gain full control of both Congress and the White House.
“I think what Kamala Harris is doing is trying to set her mission apart from that, to let people know that the tax breaks, the childcare tax credits, those are the things that should go to everyday working people,” North Carolina Governor Roy Cooper stated in an interview with PMG at the Democratic National Convention. “I think that is the right message to send. Obviously, when you are working something like that through Congress, that is an uphill challenge.”
The trickle-down ideology that tax cuts stimulate the economy, create jobs, and result in self-financing continues to resonate strongly with the GOP. Republicans argue that increasing corporate taxes would lead to job losses, reduced wages, and a shift of production to other countries with lower costs.
Trump’s campaign has portrayed Harris’ tax proposals as part of a Marxist agenda, particularly criticizing her attempts to combat “corporate price-gouging.” Republican tax strategists have also targeted Democrats for wanting to expand refundable tax credits, which are directly sent to many families as checks and resemble welfare in the eyes of many in the GOP.
“Harris’ plan represents income distribution and class warfare. That’s really what it comes down to,” stated Steve Moore, a Trump economic adviser and economist at The Heritage Foundation. “It’s, we create all these new loopholes, all these new credits, all these new deductions and then we’re going to raise the rates.”
While the presidency plays a critical role in the impending tax debate, Congress is equally important.
If Republicans gain control over the White House and Congress, they are likely to push through their tax plan without requiring Democratic support, utilizing a process known as budget reconciliation, which they employed to pass the 2017 cuts. Democrats would probably follow the same strategy if the circumstances were reversed.
However, divisions are expected.
Some Republicans, concerned about the fiscal implications of extending all expiring tax cuts—projected at $4.6 trillion over a decade, according to Congressional estimates—have indicated they might be receptive to a raise in corporate taxes.
“There is a large group of the Republican conferences in the House and the Senate that are sensitive to the deficit impact, which is much more now relative to what it was in 2017,” noted Paul Winfree, former Deputy Assistant to the President for Domestic Policy during the Trump administration and now CEO of the right-leaning Economic Policy Innovation Center.
Leaders from both parties will encounter pressure from certain members to raise or eliminate the cap on the federal tax deduction for state and local taxes implemented by the 2017 law. Such action would be costly and would primarily benefit high-income earners.
If control of the government remains divided, substantial negotiations will be necessary to prevent a sudden tax hike on millions of Americans at the end of 2025.
The challenges of such negotiations were recently highlighted by the failure of proposed legislation that aimed to satisfy both parties—an expansion of the Child Tax Credit in conjunction with the revival of several expired business tax breaks. This legislation was negotiated by the top tax authors in Congress—Senate Finance Chair Ron Wyden (D-Ore.) and House Ways and Means Chair Jason Smith (R-Mo.)—and passed overwhelmingly in the House.
However, Senate Republicans blocked it, partly due to a belief that the political climate would be more advantageous to them in the following year.
“I remain optimistic an agreement can be reached [on the cuts expiring in 2025] but it will probably take until deep into December, if not early January 2026, to get there,” remarked Rohit Kumar, former chief economic adviser to Senate Minority Leader Mitch McConnell (R-Ky.) and now co-leader of PwC’s National Tax Office.
“While divided government presents the most challenging environment in which to reach an agreement on the 2025 fiscal cliff, the scale of the automatic tax hike on every working American means the consequences of failure would be orders of magnitude more significant than the failure to pass the Smith-Wyden agreement.”
Sarah Ferris and Nicholas Wu contributed to this report.
Anna Muller contributed to this report for TROIB News
A substantial portion of Trump's 2017 tax cuts is set to expire at the end of 2025, affecting basic tax rates for individuals and families. Both Trump and Harris are emphasizing this matter in their campaigns to attract voters.
Trillions of dollars are potentially on the line, and this situation will determine whether Democrats can take a proactive stance on an issue that has historically favored Republicans.
Trump has proposed not only extending the temporary provisions from his 2017 legislation but also introducing additional tax cuts, including the elimination of taxes on tips and Social Security income, and possibly reducing the corporate tax rate further.
On the other hand, Harris has adopted President Joe Biden’s platform of taxing the wealthy and has incorporated some of Trump’s concepts, such as ceasing the taxation of tips. She has also suggested significant expansions of the Child Tax Credit.
“I will fight to give money back to working- and middle-class Americans,” Harris stated in a speech in North Carolina on August 16 while outlining her economic strategy. “Compare my plan with what Donald Trump plans to do. He plans to give billionaires tax cuts year after year, and he plans to cut corporate taxes by over a trillion dollars.”
Trump has asserted that his 2017 legislation was the largest tax cut in history (a claim that tax experts have disputed) and argues that his tax reduction plan will lead to “tremendous growth,” which would aid in reducing the national debt.
Lawmakers have previously navigated the impending expiration of tax cuts, most recently in 2012 when cuts implemented by former President George W. Bush were set to sunset, alongside various other financial triggers. The upcoming deadline for next year pertains solely to taxes, but it remains a complex and high-stakes situation with many variables at play.
The expiring provisions primarily consist of income taxes that Republicans reduced across the board in 2017 for individuals and families. Other provisions that may disappear include an increased standard deduction, a doubled Child Tax Credit, and estate tax reductions for those transferring wealth to heirs.
While Trump seeks to maintain all these cuts, Harris supports raising taxes for individuals earning over $400,000, citing that wealthy Americans have not contributed their fair share and claiming that the 2017 cuts primarily benefited them. She has also signaled her support for increasing taxes on capital gains for high earners and tightening estate tax regulations.
Although the reduction in the corporate tax rate from 35 percent to 21 percent isn’t scheduled to expire, it still figures prominently in the debate. Harris, in line with Biden, aims to raise the rate to 28 percent, while Trump has suggested a potential cut to around 15 percent.
Historically, taxes have not been a strong point for Democrats, with Republicans establishing themselves as the party of tax cuts in the 1980s, leaving their opponents on the defensive.
However, Democrats feel encouraged by polling indicating the Trump tax cuts were never particularly popular and believe they can successfully focus on imposing higher taxes on high earners and corporations, an idea that has positive polling results.
“This is an issue where the broad, broad swath of the country is in agreement that more tax cuts to the rich and powerful is not where we want to go,” Rep. Pat Ryan (D-N.Y.) remarked.
Party leadership supports Harris for centering her initial major policy discussion on taxes, despite the acknowledgment that actual implementation may prove challenging, especially if Democrats do not gain full control of both Congress and the White House.
“I think what Kamala Harris is doing is trying to set her mission apart from that, to let people know that the tax breaks, the childcare tax credits, those are the things that should go to everyday working people,” North Carolina Governor Roy Cooper stated in an interview with PMG at the Democratic National Convention. “I think that is the right message to send. Obviously, when you are working something like that through Congress, that is an uphill challenge.”
The trickle-down ideology that tax cuts stimulate the economy, create jobs, and result in self-financing continues to resonate strongly with the GOP. Republicans argue that increasing corporate taxes would lead to job losses, reduced wages, and a shift of production to other countries with lower costs.
Trump’s campaign has portrayed Harris’ tax proposals as part of a Marxist agenda, particularly criticizing her attempts to combat “corporate price-gouging.” Republican tax strategists have also targeted Democrats for wanting to expand refundable tax credits, which are directly sent to many families as checks and resemble welfare in the eyes of many in the GOP.
“Harris’ plan represents income distribution and class warfare. That’s really what it comes down to,” stated Steve Moore, a Trump economic adviser and economist at The Heritage Foundation. “It’s, we create all these new loopholes, all these new credits, all these new deductions and then we’re going to raise the rates.”
While the presidency plays a critical role in the impending tax debate, Congress is equally important.
If Republicans gain control over the White House and Congress, they are likely to push through their tax plan without requiring Democratic support, utilizing a process known as budget reconciliation, which they employed to pass the 2017 cuts. Democrats would probably follow the same strategy if the circumstances were reversed.
However, divisions are expected.
Some Republicans, concerned about the fiscal implications of extending all expiring tax cuts—projected at $4.6 trillion over a decade, according to Congressional estimates—have indicated they might be receptive to a raise in corporate taxes.
“There is a large group of the Republican conferences in the House and the Senate that are sensitive to the deficit impact, which is much more now relative to what it was in 2017,” noted Paul Winfree, former Deputy Assistant to the President for Domestic Policy during the Trump administration and now CEO of the right-leaning Economic Policy Innovation Center.
Leaders from both parties will encounter pressure from certain members to raise or eliminate the cap on the federal tax deduction for state and local taxes implemented by the 2017 law. Such action would be costly and would primarily benefit high-income earners.
If control of the government remains divided, substantial negotiations will be necessary to prevent a sudden tax hike on millions of Americans at the end of 2025.
The challenges of such negotiations were recently highlighted by the failure of proposed legislation that aimed to satisfy both parties—an expansion of the Child Tax Credit in conjunction with the revival of several expired business tax breaks. This legislation was negotiated by the top tax authors in Congress—Senate Finance Chair Ron Wyden (D-Ore.) and House Ways and Means Chair Jason Smith (R-Mo.)—and passed overwhelmingly in the House.
However, Senate Republicans blocked it, partly due to a belief that the political climate would be more advantageous to them in the following year.
“I remain optimistic an agreement can be reached [on the cuts expiring in 2025] but it will probably take until deep into December, if not early January 2026, to get there,” remarked Rohit Kumar, former chief economic adviser to Senate Minority Leader Mitch McConnell (R-Ky.) and now co-leader of PwC’s National Tax Office.
“While divided government presents the most challenging environment in which to reach an agreement on the 2025 fiscal cliff, the scale of the automatic tax hike on every working American means the consequences of failure would be orders of magnitude more significant than the failure to pass the Smith-Wyden agreement.”
Sarah Ferris and Nicholas Wu contributed to this report.
Anna Muller contributed to this report for TROIB News
