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The tax stakes are high for the 2024 election. Much of the 2017 tax law expires after 2025. Former President Trump’s tax reform legislation slashed individual tax rates and estate taxes and permanently lowered tax rates on corporations.
Most provisions impacting individuals and estates, such as the tax rates, higher standard deductions, higher child credit, the $10,000 SALT write-off cap, and larger lifetime estate and gift tax exemption, end after 2025. Unless lawmakers extend the changes, they will revert to the rules that were in effect for 2017. The next president will have to deal with these expiring tax provisions.
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President Biden wants to raise taxes on people with incomes over $400,000. It seems he would try to extend the tax rates in the 2017 law for other individuals.
The leading Republican candidates have their own ideas:
Donald Trump wants to make the 2017 tax law permanent and take it further, with even lower tax rates for individuals and businesses. For example, he has proposed lowering the 21% corporate tax rate, maybe to 15%. He also talks about imposing a 10% tariff on all imports coming into the U.S. And he’s mentioned paying a cash rebate or dividend to each American household.
Nikki Haley has lots of tax proposals on her agenda. On individual taxes, she advocates lower tax rates for working families, repeal of the itemized deduction for state and local taxes, and making permanent the popular 20% write-off for qualified business income of self-employed workers and owners of pass-through entities. She calls for ending the green-energy tax breaks in 2022’s Inflation Reduction Act. And she supports getting rid of the long-standing 18.4¢-per-gallon federal gas tax.
Ron DeSantis has some interesting ideas, in addition to his view that the 2017 tax law should be extended. For example, he favors tax abatements for businesses to incentivize the repatriation of capital from China. He doesn’t say what this exactly means, but some have referred to it as a repatriation tax holiday. He wants permanent 100% bonus depreciation. And he calls for abolishing the IRS.
Turn to Chris Christie. Surprisingly, the former governor of New Jersey, a state with one of the highest real property taxes in the country, doesn’t advocate for an end to the $10,000 cap on deducting state and local taxes on Schedule A. He instead says he’s against repeal of the cap, although he may support a higher limit.
All the GOP candidates vow to extend or make permanent the 2017 tax law, except for Vivek Ramaswamy who has stayed silent on this topic so far.
Vivek Ramaswamy wants to reduce taxes, especially for the wealthy, and is opposed to an estate tax. In the past, he has favored a 12% flat tax, though it is unclear whether this refers to a 12% income tax or sales tax. And like DeSantis, he would eliminate the IRS.
This first appeared in The Kiplinger Tax Letter. It helps you navigate the complex world of tax by keeping you up-to-date on new and pending changes in tax laws, providing tips to lower your business and personal taxes, and forecasting what the White House and Congress might do with taxes. Get a free issue of The Kiplinger Tax Letter or subscribe.