Can Trump’s Tax Reforms Survive the Swamp a Second Time?
A significant legacy item from Donald Trump’s first term is set to expire in 2025 without intervention.
Donald Trump made a plethora of promises for his first term: build a border wall, regulation reduction, and targeted tariffs on trade with China. Some of those promises came to pass, while others got bogged down in The Swamp. But his lasting legacy remains the Tax Cuts and Jobs Act of 2017, better known as the Trump tax cuts. They were the shot in the arm a moribund Obama-era economy needed. If you’ll forgive the metaphor, it was the vaccine we needed to survive the government-instituted pandemic shutdown.
(Imagine if that had happened during Barack Obama’s economy — we’d still be making the Great Depression look like a family picnic.)
Had things been different in 2020, Trump likely would have sought to make these tax cuts permanent, or at least as permanent as Congress can provide. Instead, here we are four years later, facing their expiration at the end of 2025. Still, because Trump has pulled a Grover Cleveland and will return to the office he once held, he has a golden opportunity to burnish his legacy further — and not a moment too soon. Furthermore, Trump has dangled the idea of removing taxes on tips, overtime, and Social Security benefits as other ways to build up the working class along with keeping the cuts.
Democrats fought the tax cuts tooth and nail as the minority party in 2017, lying to the heavens (and the American people) that it was “tax cuts for the rich.” We’ve heard that gaslighting refrain for almost eight years. Despite having a trifecta of government for the first two years of Joe Biden’s term, however, barely a thing was done to bring in a revenue collection system more to the Democrats’ liking. Earlier this year, Biden’s tax proposals, featuring increases in the corporate tax and a “billionaire’s tax,” were even more DOA with a Republican House.
As Dominic Pino of National Review requests, “When politicians prattle on about the rich’s ‘fair share,’ ask what that would look like compared with the extremely progressive income tax the U.S. already has.” The Wall Street Journal has also taken the appropriate information from the Tax Foundation and made it easy to digest. Remember: We’re talking about an extension of the rates that are already in place, which was a broad-based tax cut that hit every bracket, and the Republicans should hammer that message home.
It’s not just about the numbers, though, because rich people don’t engender a lot of sympathy from those who believe Uncle Sam could and probably should bleed that group dry. The “fair share” chorus needs to understand that even taking every dime made by Warren Buffett, Elon Musk, and their cohort of billionaires wouldn’t come close to satiating the avaricious annual thirst of the federal government.
For decades, Americans have set themselves up financially to garner a windfall in the spring when the IRS sends (some) money back in that big tax refund check. Set aside for the moment that all the ratepayer has done is provide an interest-free loan to the government, and bear with me. They won’t refuse an “extra” $500 or $1,000 coming their way, will they? That’s an example of what they received when the Trump tax cuts came through, and they have done so for several years now.
Moreover, if the Democrats had gotten their way with the tax code, those of us on the productive side would have lost out on opportunities to save and invest. Since the adoption of the Trump tax cuts, Americans for Tax Reform has kept a tab on increased business investment and benefits to employees traceable or credited to the 2017 bill. As noted above, it provided an economic booster that came in handy during the pandemic.
There are many things Congress will be fighting over as Donald Trump returns to the Oval Office. Still, a top priority should be extending — and improving — the positive tax reform legacy he began.