US | Tax Policy
July 24, 2024
US: Anticipated Tax Plan Under Trump
Intentions for a Potential Second Term
The Republican nominee has not yet released a fully detailed tax plan for a potential second term, but he has provided some insight into his intentions.
EXTENSION OF THE TAX CUTS AND JOBS ACT
One of Trump’s major policy proposals is extending the 2017 Tax Cuts and Jobs Act (TCJA), which is set to expire in 2025. The TCJA, enacted under Trump in 2017, reduced the corporate tax rate from 35 percent to a flat 21 percent. Trump has expressed interest in further reducing the corporate tax rate to 20 percent, and possibly to 15 percent, though he acknowledged the latter would be challenging to achieve.
The TCJA also lowered income tax brackets for all but the lowest earners, increased the standard deduction for individual taxpayers and small businesses, and enhanced the child tax credit. Trump aims to maintain these tax reforms if he returns to the White House.
TARIFFS
To offset the revenue loss from maintaining tax cuts, Trump has proposed imposing a universal baseline tariff on all U.S. imports and increasing tariffs on China to at least 60 percent. He even suggested eliminating income taxes altogether and replacing them with higher tariffs in a private meeting with GOP lawmakers earlier this year. However, this proposal has faced criticism, with experts arguing it would benefit the wealthiest Americans and be challenging to implement.
NO TAXES ON TIPS
During a campaign stop in Las Vegas on June 9, Trump proposed exempting service workers' tips from income tax. It remains unclear if this exemption would apply only to federal income tax or include payroll taxes as well.
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