As we approach the 2025 expiration of the Tax Cuts and Jobs Act (TCJA), the future of the U.S. tax system looms large. Both Kamala Harris and Donald Trump offer starkly different visions for what happens next. With significant changes on the horizon, understanding their approaches could help you plan for what’s to come.
The TCJA, implemented in 2018 under the Trump administration, brought sweeping tax cuts for corporations and individuals alike. It lowered the corporate tax rate from 35% to 21% and provided temporary individual tax cuts that are set to expire in 2025. While supporters argue that the TCJA stimulated economic growth and increased competitiveness, critics point out that it disproportionately benefited the wealthy and added to the national deficit.
Trump’s Vision Post-2025
Should Trump return to office, he’s expected to push for an extension of the TCJA’s cuts, possibly making them permanent. Trump’s tax policy is centered on supply-side economics, which favors reducing the tax burden on corporations and high earners. His belief is that this stimulates investment, creating jobs and boosting the overall economy. Extending the individual tax cuts would keep rates low for most Americans, but the larger question is how to address the deficit, which has ballooned since the enactment of the TCJA. Trump’s camp will likely argue that more cuts will lead to stronger growth, mitigating these concerns in the long term.
Harris’ Alternative Path
Kamala Harris, on the other hand, would likely take a very different approach. A key aspect of her tax policy is aimed at reducing income inequality. She has advocated for raising taxes on high-income earners and corporations, returning to pre-TCJA levels or even higher. Harris would likely let the TCJA individual cuts expire and introduce new relief targeting the middle class and low-income families. Her plan may include tax credits for working families and investments in healthcare and education, funded by increased revenue from high earners and large corporations. Harris’ approach aligns with progressive tax policies that aim to redistribute wealth and reduce the growing income gap.
The Future of the Tax Code
Ultimately, the choice between Harris and Trump for the future of the tax code comes down to contrasting philosophies: one side emphasizes economic growth through tax cuts for businesses and the wealthy, while the other focuses on redistributing tax burdens to create a more equitable system. With the 2025 expiration of the TCJA looming, the stakes are high. How Congress and the next administration choose to act will impact businesses, individuals, and the U.S. economy for years to come.
As a taxpayer, it’s critical to stay informed about these developments and consider how the outcome may affect your financial situation. Whether Trump or Harris gets the opportunity to reshape the tax code, change is coming—are you ready?
