President Joe Biden said if he is re-elected, he will let former President Donald Trump’s tax cuts expire. He wants big increases/changes in corporate tax rates, capital gains and estate taxes. Trump wants to extend some and further cut other taxes. According to new estimates released by the Congressional Budget Office (CBO), permanently extending the expiring provisions of the Trump tax cuts would cost $4 trillion over the next 10 years – $400 billion per year. That would come atop $20 trillion in new deficits projected under current laws.
The tax debate will likely consume lawmakers’ attention next year. If Congress doesn’t act by Dec. 31, 2025, marginal income-tax rates would climb and the standard deduction and child tax credit would shrink. More than 60% of households would see tax increases, though 9% would get a tax cut.
Of note: The budget reconciliation process allows the party in control of the Senate to pass certain legislation with a simple majority. Think of the Trump-era tax bill as well as the Inflation Reduction Act from Biden’s first term. Budget reconciliation is only applicable when one party controls the House, Senate and White House.
