Vice President Kamala Harris began to sketch out details of her economic agenda as part of a fast-moving 2024 presidential campaign. On tax policy, Harris carries forward many elements of President Biden’s tax vision while further expanding tax credits and incentives to lower costs for families.
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Exempting Social Security benefits from income tax would increase the budget deficit by about $1.6 trillion over 10 years, accelerate the insolvency of the Social Security and Medicare trust funds, and create a new hole in the income tax without a sound policy rationale.
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While both President Biden and Vice President Harris aim their proposed tax hikes on businesses and high earners, key differences between their tax ideas in the past reveal where Harris may take her tax policy platform in the 2024 campaign.
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A 15 percent corporate rate would be pro-growth, but it would not address the structural issues with today’s corporate tax base.
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A new trade war could wipe out the benefits of pro-growth tax reform.
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As members of Congress prepare to address the expiration of the TCJA, they should appreciate how revenues have evolved since 2017.
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While neither full expiration nor a deficit-financed full extension of the TCJA would be appropriate, lawmakers should consider the incentive effects of whichever tax reform they pursue. Because taxes affect the economy, they also affect the sustainability of debt reduction.
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President Biden is proposing extraordinarily large tax hikes on businesses and the top 1 percent of earners that would put the US in a distinctly uncompetitive international position and threaten the health of the US economy.
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For over a century, lawmakers have exempted politically favored organizations and industries from the tax code. As a result, the tax-exempt nonprofit economy now comprises 15 percent of GDP, roughly equal to the fifth-largest economy in the world.
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Lawmakers should see 2025 as an opportunity to consider more fundamental tax reforms. While the TCJA addressed some of the deficiencies of the tax code, it by no means addressed them all.
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Short FormImproving the country’s fiscal situation won’t be comfortable, but economic growth can help cushion the blow.
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Policymakers should have two priorities in the upcoming economic policy debates: a larger economy and fiscal responsibility. Principled, pro-growth tax policy can help accomplish both.
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Over the next 10 years, the IRA’s energy tax credits are projected to cost north of $1 trillion, adding to the federal government’s budgetary challenges and burgeoning debt.
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Given that U.S. debt is roughly the size of our annual economic output, policymakers will face many tough fiscal choices in the coming years. The good news is there are policies that both support a larger economy and avoid adding to the debt.
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The CBO projects deficits will be higher than historical levels, largely due to growth in mandatory spending programs While some recent legislation has reduced the deficit, the Inflation Reduction Act is proving to be more expensive than originally promised.
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Limiting interest deductibility continues to be a worthwhile policy goal, but given the current climate, policymakers should opt to pair any further limitations with other pro-growth policies such as full expensing to ensure firms’ incentives to invest are preserved.
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Lawmakers should use the year ahead to thoroughly review and debate lasting, fundamental tax reform and prioritize policies that best boost work and investment incentives in a fiscally responsible manner.
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What historical lessons of wartime finance can Ukrainian and EU policymakers learn to put Ukraine’s economy on a path to success during, and especially after, the war?
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If tax increases are included in a package, international experience points toward raising consumption taxes, rationalizing tax expenditures, and broadening the tax base—not hiking income taxes.
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As Congress continues its work on the fiscal year 2024 appropriations process and associated tax provisions, it should consider an often-overlooked tax provision: the limitation on deductions companies take for interest payments.
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