2024 Election Spotlight: Biden vs. Trump on Tax Fairness

In response to the upcoming expiration of many of the income tax cuts implemented by former President Donald Trump, the Biden administration is emphasizing the importance of tax fairness ahead of the 2024 elections. Lael Brainard, Director of the White House National Economic Council, will speak at the Brookings Institution about the major tax challenge facing whoever wins the November presidential election. While Trump asserts that tax hikes would destroy the US economy, President Joe Biden intends to extend middle-class tax cuts whilst raising taxes on highly profitable firms and the wealthiest segment of society. As per the Tax Policy Centre, a family in the 40th to 60th percentile of earners could save an average of $930 annually, but someone in the top 1% could receive $51,140, and those in the top 0.1% could save $193,380. Despite Biden’s insistence that he only intends to impose higher taxes on the wealthy and businesses, Trump claims that Biden would raise everyone’s taxes at his rallies. The Republican also maintains that the high inflation under Biden is equivalent to a tax increase, which would worsen if Biden remains in office. However, Trump himself proposes significant tax increases, such as a proposed 10% import tariff worth around $3tn annually, which would force customers to pay $1,500 extra a year, effectively representing a tax hike. Extending all of Trump’s tax cuts that expire at the end of next year would add another $4.6tn to budget deficits through 2034, as per the Congressional Budget Office. Brainard’s speech highlights the failure of the 2017 tax cuts to deliver the growth promised by Republicans and the way in which wealthy households were able to pay lower taxes than many individuals with middle-class earnings due to the unique set of rules they played by. Several experts, including Brian Riedl, a senior fellow at the Manhattan Institute and a former Republican congressional aide, argue that Biden’s position on tax cuts is inconsistent because he simultaneously advocates for killing the Trump tax cuts and preserving them for individuals earning less than $400,000. Republicans may face difficulty in extending the 2017 tax cuts without exacerbating the government’s financial predicament, according to Paul Winfree, the president and CEO of the Economic Policy Innovation Center. This could result in higher deficits, forcing lawmakers to consider potential spending cuts. Higher debt levels could also drive up interest rates, leading to more expensive mortgages and car loans for ordinary citizens.