By outdoor-nature-child.com As the upcoming election approaches, the Wall Street Journal reports that the results will significantly influence taxpayers’ financial burdens from 2025 onward. The question looming over voters is whether taxes will increase, decrease, or remain unchanged. If the Republican Party succeeds in winning the White House and both chambers of Congress, they may launch a new wave of tax cuts. Conversely, should Democrats secure control of both the executive and legislative branches, larger corporations and wealthy households could see their tax rates rise. In a scenario where one party controls the presidency while the other dominates Congress, the future of tax legislation remains uncertain.
The WSJ notes that while there is no urgent push for Congress to change tax laws, inaction could have substantial repercussions. If Congress does not take any steps, many of the tax cuts enacted by Republicans in 2017 will expire after 2025, resulting in tax increases for approximately 62% of households nationwide.
Brad Close, President of the National Federation of Independent Business, emphasizes that regardless of who occupies the White House or which party controls Congress, tax legislation is expected next year. However, the specifics—such as the nature, timing, and scale of the laws—remain unclear.
Should the Republicans hold both the executive and legislative powers, they may argue that the tax cuts of 2017 contributed to robust economic growth in 2018 and 2019, hence a desire to maintain them. They would likely favor extending low tax rates and increasing standard deductions for households. Additionally, there is significant interest in preserving the 20% deduction for certain connected businesses.
However, divisions within the Republican Party and the rules of the House may constrain their efforts, especially in a narrow majority situation.
Michael Pugliese, a senior economist at Wells Fargo, points out that the current income disparity is at an all-time high, and the Republicans will need to set clear objectives regarding how much their tax proposals will add to the deficit over the next decade.
If Democrats take control of both the presidency and Congress, they might aim to extend tax cuts for households earning under $400,000. Vice President Kamala Harris is expected to uphold President Biden’s commitment to safeguarding those below that income threshold. In districts represented by many Democrats, which tend to have higher incomes, there may be pressure to raise the threshold to protect a broader electorate while reducing federal tax revenue.
Harris has made it clear that she does not oppose anyone generating wealth, but she insists that the government must ensure a fair tax burden for all to support initiatives such as the child tax credit.
Nonetheless, the $10,000 cap on state and local tax deductions has caused division within the Democratic Party. Progressives argue for increased taxation on high-income families. If Democrats gain control of both the presidency and Congress, current House Democratic leader Hakeem Jeffries and Senate leader Chuck Schumer will likely push for various legislative initiatives, including potentially raising or eliminating the deduction cap. Harris, who co-authored legislation to eliminate the cap, has yet to publicly express her stance on the matter as a presidential candidate.