The $6T Gap Between Trump’s and Biden’s Tax Plans | WSJ

- President Biden and Donald Trump have very different tax

plans

that they would like to implement if they are elected for another term, very different. - There is a difference of 6 trillion dollars, at least between the two parties if each implemented their own ideal policies. - With the sweeping 2017 tax cuts set to expire at the end of next year, Biden and Trump are heading in opposite directions. - A fair tax code is how we invest things to make this country great. - And we will reduce your taxes even more. That's what built our economy. (crowd applauds) - Here's what's in that $6 trillion chasm and the difficulties in turning those

plans

into law. - This is the bill that appears here and we are very proud of it. - In December 2017, Trump signed into law the most far-reaching law on the US tax system in decades.

The legislation included lower individual tax rates that would end before Jan. 1, 2026 with a top rate of 37% down from 39.6% previously. Standard deduction, increased. The Child Tax Credit was doubled and the corporate tax rate was permanently reduced to 21%, its lowest point since 1939. - The goal was to try to stimulate investment to give companies more deductions, lower rates, lower taxes on your profits, so that you would be more incentivized to make profits, to give people more money in their pockets, so that they would spend more money. - But the extensive cuts also drew criticism. - The president is part of the top 1% and the bill is intended to help the top 1%. - If Congress does nothing, those individual tax cuts will expire at the end of 2025 and the government estimates that national income would follow this line.

Neither Biden nor Trump want that to happen. Trump's plan would generate less money than the base income. Biden's plan would raise more. They both agree on expanding tax cuts for households earning less than $400,000 a year, but there is a big difference in how they would tax large corporations and people at the highest income levels. - I will make Trump's tax cuts permanent. You know, they expire in a year and we'll cut your taxes even more than that. Trump's approach to taxes is to try to reduce them. Trump and the Republicans really believe that low tax rates are incredibly important for the economy. - Extending those tax cuts would cost the government up to $4 trillion over the next decade.

For example, maintaining lower rates and wider tax brackets for ordinary income would cost about $2 trillion, and the expanded standard deduction would reduce federal revenues by more than $900 billion. - There has been some back and forth among Republicans about exactly how comfortable they are with further increases in the deficit due to tax cuts. In the 2017 law, not everyone got a tax cut. There were things that raised money to help offset the changes they made but overall they weren't trying to keep the deficit neutral. They were willing to increase deficits to reduce taxes and that is a decision they will have to make again. -On the other side of the divide, Biden not only wants to pay for the rate cuts he would like to maintain, but also generate additional revenue.

Achieving it would not be easy. -He wants to expand tax cuts for people who earn less than $400,000. So it's a couple trillion dollars, not the full 4 trillion, but you know a good chunk of that to keep those tax cuts for most people. -Beyond that, Biden says he will raise taxes in other areas to generate more money for the government. - If you want to win, you can win a million or millions of dollars, that's great. Just pay your fair share in taxes. - Justice is in the eye of the beholder when it comes to taxes. His idea is basically that high-income individuals and corporations should pay more and that money should largely go toward new programs and reducing the deficit. -Biden hasn't explained exactly where all this money would come from, but he has outlined what some key revenue sources would be, including increasing the corporate tax from 21% to 28%.

The Treasury estimates that alone would raise about $1.3 trillion for the government over 10 years. He has also proposed taxes on people at the top. Like an increase in the Medicare tax, modernizing capital income taxes, and imposing a 25% minimum tax on the super-rich. That set of changes would raise more than $1.8 trillion. Overall, Biden wants to cover the $4 trillion needed to continue the tax cuts and also raise taxes by more than $2 trillion, but there's a catch. -Many of the tax increases Biden is implementing are ones he introduced in 2020 or ones he proposed during his first term. Democrats controlled the House, Senate and White House for 2021 and 2022, and very few of the tax increases they wanted passed.

When we think about the $6 trillion or more gap between the two candidates, a lot really depends on the election results. - Both Democrats and Republicans want to extend tax cuts for most Americans, but even doing so will be difficult. - There is likely to be a big tax bill in 2025 and so even if there is a point of agreement on what happens for most people, the income consequences, the distributional consequences and the political consequences are linked to what happens to corporations and high-ranking companies. income people. People earning less than 400k should feel somewhat confident that their tax cuts will be expanded because both parties want to do so, but this will be inextricably linked to what happens more broadly with all the contentious parts of the tax cuts. (piano music)