Approaching the cliff: Tax policy and the 2024 elections

With nominating conventions behind them and the presidential campaign now moving into high gear post-Labor Day, the two leading contenders in the race for the White House—Vice President Kamala Harris, who became the Democratic Party’s standard bearer after President Joe Biden withdrew from the contest in July, and former President Donald Trump, who Republicans have tapped to run for a second term in the Oval Office—have begun to make their final case to voters ahead of the November 5 general election.

Throughout the primary election season, both parties presented their respective tax policy arguments largely in broad strokes and focused chiefly on disagreements over the Tax Cuts and Jobs Act of 2017 (TCJA), the signature legislation of the Trump administration that moved through a Republican-controlled Congress under fast-track budget reconciliation protections. That law fundamentally changed the tax treatment of US-based multinationals, lowered corporate and personal tax rates, and broadened the tax base for both businesses and individuals. The bulk of the TCJA’s corporate and business tax code changes are permanent law; however, because of long-term fiscal constraints baked into the budget reconciliation process—namely, that legislation moved under the special parliamentary procedure cannot increase the deficit in the years beyond the budget resolution that includes the underlying reconciliation instructions—Congress opted to make many of the provisions on the individual side of the tax code temporary, with sunset dates at the end of 2025. Congress also included phase-ins and phase-outs for certain TCJA provisions—many of which have since come into effect—that raised revenue on the business side of the tax code, as well as other changes scheduled to take effect at the end of next year that will raise additional revenue from multinational corporations.

All of this sets up the prospect of a massive fiscal cliff for the next White House and the next Congress as they grapple with how to address the pending expiration of marquee TCJA provisions such as reduced income tax rates for individuals, the doubled child tax credit, increased exemption amounts for the individual alternative minimum tax and the estate and gift tax, and the 20 percent deduction for passthrough business income. The nonpartisan Congressional Budget Office estimated in May that the 10-year cost of permanently extending all of the lapsing provisions will come in at $4.6 trillion—a $1.1 trillion increase from similar projections the agency issued in 2023.

The Kamala Harris tax plan: Key proposals and potential impacts

Vice President Harris and congressional Democrats generally agree that the expiring TCJA provisions should be extended for taxpayers with income of less than $400,000 ($450,000 for joint filers) and should be allowed to expire for more affluent taxpayers. They also support offsetting the cost of any TCJA extensions with new taxes on large corporations and upper-income individuals.

Trump tax policy: Continuity or change in 2025 tax law?

Former President Trump and congressional Republicans, for their part, contend that the TCJA should be extended in its entirety. Trump has not thus far discussed how, or even whether, he intends to pay for renewing the expiring TCJA provisions. But if he wins a second term in the White House, he is likely to face pressure from Congress—including from some Republicans—to include revenue offsets as part of a larger tax plan.

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Approaching the cliff: Tax policy and the 2024 elections offers an overview of how Vice President Harris and former President Trump would likely address the expiring TCJA provisions, based on their stated positions and the planks in their respective party platforms, and discusses other tax proposals unrelated to the TCJA that the two have mentioned—generally without providing much detail—during their respective campaigns. Both candidates may provide additional insights into where they stand on tax policy between now and November.

It is also important to note that generally tax legislation originates in Congress, not the White House, so any tax law changes enacted in a Harris administration or in a second Trump administration will necessarily also carry the imprimatur of the legislative branch with its many competing interests and priorities. With that in mind, this report considers how the next president’s tax policy ambitions—including the extent to which revenue raisers are used to offset the cost of any TCJA extensions or other tax relief proposals—are likely to be shaped by the make-up of the incoming 119th Congress.